Buy now or wait! This is the question on all potential homebuyers’ minds this fall. Over the past few weeks, the mortgage interest rates have soared to a 14-year high. Excessive government spending combined with surging energy costs and rising inflation has caused many would-be homebuyers to lean toward the wait side of that argument. But is this really a bad time to purchase a new home? Maybe not.
First, there is no way to predict the bottom of home prices for any recession. If the economy continues to struggle, it’s likely that home prices will continue to drop, offering better sales prices. But at the same time, inflation is still rising, and the Federal Reserve has clearly indicated they will raise interest rates as needed to cool this trend. This means that while home prices may come down some, the cost to borrow money will also rise; for homebuyers on the fence, they are hoping that the lower sales price will outpace the rising interest rates.
The truth is there is no way to know this.
Therefore, is this a good time to buy a home? Yes, if the home buyer finds the right home. There are three important things to consider. One, rising inflation will affect rent prices and a stable mortgage payment is a great hedge against increased housing costs. Two, buying a home allows the new homeowner to start building equity immediately. Finally, a mortgage can be refinanced when the economy recovers, home values recover, and interest rates come down. So, potential homebuyers should not shy away from buying a home, if they find the right fit for their needs.
Have you ever bought a home at a high mortgage rate with the idea that once rates went down that you would simply refinance?