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The spring has traditionally been a popular time for homebuyers and sellers. With warmer weather comes greater curb appeal and, thus, a natural opening to sell a home. By purchasing a house now, buyers can also potentially close on the property and move in well before the start of the fall school season. That said, spring homebuying seasons in recent years have been less robust, thanks to a troublesome combination of inflation and elevated mortgage interest rates. Limited housing inventory compounded those issues, too.
But there are signs that the mortgage rate climate could be cooling once again. Mortgage rates that plunged to 6.15% last September but then rose as inflation ticked up again in recent months are now heading down again. Mortgage rates in the United States fell for a seventh straight week this week and are now in the 6% range. The average for a 30-year mortgage loan, specifically, dropped by more than 10 basis points week-over-week to 6.63% from 6.76%, according to FreddieMac.Ā
At the start of a new spring homebuying season, then, and with mortgage rates moving in a positive direction for buyers, many may be wondering if now is the right time to buy a home. Below, we’ll break down what to consider.
Start by seeing how low of a mortgage interest rate you could secure here.
Should you buy a home with mortgage rates falling again?
While the sub-4% mortgage rates easily secured in the past decade are unlikely to return soon, that doesn’t mean that you should necessarily delay purchasing a home. Specifically, you may still want to buy now because:
Rates are falling
Remember, the mortgage rate you secure early on in your homebuying process doesn’t necessarily have to be the same one you close with. So consider locking in one of today’s lower rates for security but continue monitoring mortgage rates daily for an opportunity to unlock your current offer and relock a new, better one (lender requirements may vary). Just be sure to maintain a good credit scoreĀ during this process to qualify for a low rate whenever it becomes available. Still, if today’s trends persist, you may be able to secure a rate much lower than you may have anticipated just a few months ago.
Lock in a low mortgage rate here now.
You won’t find today’s home again
Some homebuyers simply do not have the luxury of waiting for an ideal mortgage interest rate, particularly if they’ve already found a home that they can afford, in a neighborhood in which they want to live. In these circumstances, most experts would recommend buying the home anyway ā and refinancing when rates readjust in the future. The approach of “dating the rate and marrying the home” may not be financially rewarding in the short term, but it can be largely beneficial in the future as you will have secured a home you may otherwise have lost out on if you elected to wait for rates to decline.
You’re not building equity
While renting in some parts of the country may come with cheaper monthly payments, the difference between a mortgage payment and rent is clear. Only the former comes with the bonus of built-up equity. Rental payments aren’t designed to build long-term wealth. But home equity can do just that. And, once you’ve built up enough equity (the average homeowner ā not renter ā has around $313,000 right now) you can potentially borrow from it with a home equity loan or other home equity product. But you’ll need to buy now to start developing that value.
The bottom line
With mortgage rates steadily declining again, limited opportunities to find your dream home and the absence of long-term wealth building minus a real estate purchase, many Americans may find this spring a good time to get started on the homebuying path. It may not be as ideal as it was a few years ago but with the right approach and a thorough understanding of what’s possible, buyers can still set themselves up for financial success in a home they love.