Mortgage interest rates have fallen from over 8% one year ago to 6.25% after the latest Federal Reserve rate cut. If you are in the market to buy a home you may be wondering if now is a good time to buy or if you should wait for rates to fall even further. Waiting to buy has opportunity costs that need to be considered. Here are 3 risks to think about to help you make a decision:
- Higher Prices: With interest rates falling more buyers will be out shopping for their next home. With demand increasing and supply still low, prices are likely to rise. So you may pay more for that dream home if you wait.
- Fewer Seller Concessions: As more buyers enter the market, sellers will feel less inclined to make concessions, make repairs, or negotiate.
- More Competition: With an increase in buyer demand the likelihood of getting that dream home goes down. Increased demand usually results in multiple offers and homes selling on the private network before they ever hit the open market.
Waiting can really cost you. That $400,000 home you want now may be $450,000 in a year. If rates fall, you can always refinance. And while rates may seem higher than recent history, the 30-year average of mortgage interest rates is 7%. Historically, rates are at a very normal level.