If you’re ready to buy a home, you might be feeling discouraged about the affordability challenges brought on by high mortgage rates. While there are certainly some downsides to buying a home when interest rates are high, there are also some positives to buying at this time:
1. Housing prices could be lower by the end of the year. According to GOBankingRates, “experts predict a drop of 10% to 15% before the end of the year, which would be the largest housing price correction since World War II.”
2. You'll face less competition. Higher interest rates means fewer buyers competing for homes. Homes will stay on the market longer, giving you more time to make careful decisions. You'll also feel less pressure to waive contingencies.
3. Homes are less likely to sell for more than their appraised value. And that’s good news because most lenders won’t approve a mortgage with a loan-to-value ratio under 20%.
4. You can buy down your interest rate. At closing, you have the option to purchase “discount points” to reduce your interest rate. According to GOBankingRates, “typically, for every 1% of your mortgage loan amount you pay at closing as ‘discount points,’ your interest rate will drop by .25%.”
5. You may be able to refinance in the future, coupling today’s lower prices with next year’s (hopefully) lower rates. There’s no way to guarantee what will happen with interest rates, but if you stay in your new home long enough, the opportunity to refinance should eventually arise.
To learn more about the potential benefits of buying a home while interest rates are high, check out this article at GOBankingRates or give your realtor a call!