The Cost of Waiting for Mortgage Rates To Go Down

Mortgage rates have skyrocketed and what does that mean for you? We will give you some tips in order to make an informed decision when you set your homebuying plans in place.

The Impact of Rising Mortgage Rates

Mortgage rates rise over time and that does take an effect on you as to what you can and cannot afford to buy.

Say you wanna buy a house that costs $400,000 (the median-priced home according to the National Association of Realtors is $389,500). Your monthly mortgage payment will cost about $2,500 - 2,600 or so. Below, we have a chart that shows how your purchasing power changes overtime when mortgage rates go up. The green indicates a payment that is within your target range while the red shows payments above that threshold.

Provided by Keeping Current Matters (KCM)

As rates go up, the amount you can afford to borrow decreases. This means that you need to look at homes that are in your price range. If you have questions to know what you can and cannot afford, or if you are looking to buy your dream home, contact The Duran Reed Firm today (310) 519 -7670

Will Mortgage Rates Go Down?

There has been a significant increase of rise in mortgage rates as well as a decrease in purchasing power that makes you wonder whether or not you should wait for rates to go down before making a purchase. Realtor.com states:

“Many homebuyers likely winced . . . upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that’s pushing mortgage rates through the roof. And the already high rates are just going to get higher.”

It’s hard to determine at the moment whether mortgage rates will go down or not because the market is always changing. Due to inflation, the Federal Reserve has been trying to get that under control. Therefore, it may take a while for them to get mortgage rates to go back down.

If you want to rent in the meantime, considering that as your other option; also consider that it will get more expensive with time too. Senior Economist and Director Nadia Evangelou of Forecasting at the National Association of Realtors (NAR) states:

“There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.”

To conclude, it is more expensive to buy or rent this year than it was last year. The difference in buying rather than renting is you are gaining equity overtime, which is helping you grow your net worth. When you rent, your money goes nowhere. What makes more sense for you to do overall? That question is up to you.

Contact me today if you have any questions or are looking to buy a home! (310) 519 -7670