Now’s the Time to Buy Your Dream Home and Ride the Wave of Dropping Mortgage Rates!

Hey there, first-time home buyer! I know the thought of purchasing your own home can be both thrilling and overwhelming. With so many decisions to make, one of the biggest dilemmas is deciding when is the right time to jump into the real estate market. Well, let me tell you why the present moment might just be the perfect time to take that leap and turn your homeownership dreams into reality!

Imagine this: you’ve discovered the ideal house that ticks all the boxes—charming, spacious, and perfectly located. However, here’s the catch: the current mortgage interest rates are at 6.375% ( May 18, 2023). Now, at first glance, this might not seem too appealing, but let me share an exciting perspective with you that could make all the difference. Are you ready?

30 Year Mortgage Rate in the United States averaged 7.75 percent from 1971 until 2023, reaching an all-time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.

Mortgage rates play a significant role in determining the amount of interest you’ll pay on your home loan. While the current rates might seem higher than you’d like, there’s a possibility that they could drop to the high 4’s in just two years. And that’s where the magic happens! By purchasing your home now, you can position yourself to take advantage of potentially lower rates in the future through a process known as refinancing. Let me explain why this could be a game-changer for you.

Refinancing is essentially the act of replacing your current mortgage with a new one, usually at a lower interest rate. So, even if you decide to buy a home now with a rate of 6.375%, there’s a chance that in two years, you could refinance to a more favorable rate in the high 4’s. This means significant savings over the life of your loan and a golden opportunity to make your financial dreams come true. Exciting, right?

Let’s walk through a real-life scenario to understand the potential impact. Suppose you purchase a home today with a mortgage rate of 6.375%. Fast forward two years, and interest rates drop to the high 4’s. By refinancing your mortgage at the lower rate, you could save a substantial amount of money over the long haul. This can provide you with extra cash for investments, home improvements, or even that dream vacation you’ve been yearning for. It’s like capturing a wave and riding it toward financial prosperity!

Timing the real estate market perfectly is an impossible task. However, the current environment, with the mortgage rate at 6.375% but possibly dropping to the high 4’s in the next two years, presents an intriguing opportunity for first-time home buyers like yourself. By purchasing now and refinancing in the future, you can maximize your savings and make the most out of your investment.

The Cost of Waiting for Lower Rates

Let’s say you are looking at buying a $400,000 house today and could get a 6.375% conventional fixed-rate mortgage with 5% down payment.  Your cash to close would be about $29,700 and your full payment with taxes and insurance would by $3310.  But, you decide to wait because your dad said the rate is too high and you should wait.

Well, you did and this is what would likely happen.  You would now pay $426,800 for the same house because it has gone up by 8%.  Your mortgage rate did go down to 5.5% but your cash to close went up to $31,500 and your payment went up to $3352.

What you should have done was refinance that house when the mortgage rate hit 5%, your new payment would be $2869 now and you would have at least $26,500 extra equity. ( This is just an estimate and not intended as fact or predetermined future values, options will vary) 

So, my friend, if you’ve found your dream home and the stars have aligned with current mortgage rates, don’t let the fear of potential fluctuations hold you back. Seize this opportunity, secure your place in the homeownership club, and position yourself for potential future financial gains. One of the best ways to build your family’s financial future is through homeownership. The Federal Reserve reports the net worth of a homeowner is actually over 40 times greater than that of a renter.

Remember, buying a home is not only about finding the perfect house; it’s also about seizing the right timing. And right now, with a chance to benefit from future rate drops, the timing couldn’t be more enticing. Get ready to unlock the door to your new home and embrace the joy and stability that comes with owning a place to call your own. Happy house hunting!