Should you wait to buy a home? Here’s what experts say to do

After 10 consecutive rate hikes, the Federal Reserve decided this month Keep the target interest rate at 5% and assess the effectiveness of its efforts to curb inflation. As the Federal Reserve begins a series of interest rate hikes in March 2022, mortgage rates have also risen, making the home buying process more challenging.

At the same time, home prices have risen during the pandemic, and despite the recent cooling, housing supply shortages continue to support these high prices.

In this scenario, the primary question on many homebuyers’ minds is: Should I buy a home now or not? wait? The answer will depend on your financial situation, goals and risk tolerance level. Below, we’ll dive deeper into both sides of the question for a better understanding, so you can make the best decision for you and your family.

Start by exploring your mortgage rate options here and see what rate you qualify for.

Why you should consider buying a home now

After home sellers enjoy a period of rising home prices, the market may shift in favor of buyers in some parts of the country. As of March Case-Shiller US National Home Price NSA IndexHome prices have fallen for seven consecutive months.

“We’re actually in a buyer’s market for first-time homes in 10 to 15 years,” said Tawan Davis, founder and CEO of The Steinbridge Group, an investment firm with a large focus and portfolio in real estate. “If a buyer is ready, this may be a time when they can influence prices and terms in ways that haven’t been available recently.”

house price This may be another reason to consider buying now. High demand, low supply and other factors are broadly supporting home prices despite cooling in some areas. “Unless the economy enters a severe recession, housing can be a major win, you can’t lose situation,” said Michael Ashley Shulman, CFA at Running Point Capital Advisors. “If you buy now and interest rates go up from here, the monthly mortgage payment will go up even if home prices go down a bit, but you’ll be locked in at below market rates; and if interest rates go down, home prices can jump higher, and you You can refinance your home at a lower mortgage rate.”

Afifa Saburi, a senior researcher at Veterans United Home Loans, noted that “Home prices will vary by market, but due to housing supply constraints, home prices are more likely to remain stable rather than depreciate. For a buyer looking to purchase a home in today’s market, rents are 7.2%. It may make more sense to avoid annual increases and lock in a fixed monthly mortgage payment that won’t increase year after year.”

Explore your mortgage purchase options here now to see if the time is right for you to buy.

Consider why you should wait to buy a home

According to a recent report from Fannie Mae, 65% of consumers believe it is a bad time to buy a home. Many home buyers are waiting Bail rate thrown away. Although Bail rate With 30-year fixed-rate loans currently averaging 6.69%, an April 2023 report from Fannie Mae predicted rates would drop below 6% in the latter half of the year.

While a rate reduction of just over half a percent doesn’t seem like much, it represents substantial savings over time. For example, if you purchased a $400,000 home with a 20% down payment, your monthly payment on a 30-year fixed-rate mortgage with an interest rate of 6.69% would be $2,062.77. However, the same loan with a 5.90% mortgage rate comes with a lower monthly mortgage payment of $1,898.04, a savings of $116.73 per month. At 6.69% interest, you would pay $422,596.24 in total interest over the life of the loan but only $363,293.26 or $59,302.98 less with a 5.9% loan.

“As a financial advisor, I would recommend my clients wait at least a year before buying a home in this market,” said Yang Pham, financial advisor and investment analyst at BizReport. “It would be paying extra to buy a home now, but that’s not what I’m worried about. With mortgage rates rising and housing prices staying high, those factors will likely weigh heavily on demand,” Pham added.

Bottom line

Should you wait to buy a home? While the previous opinion helps us shed light on the current housing market, the answer to this question is personal and specific to you and your unique circumstances.

It is also important to remember that trying to time the market can be futile due to various variables including economic conditions and supply and demand. Dana Cornell, CEO and founder of Cornell Capital Holdings, added: “As with any market, variables will inevitably shift in both directions, as they always have. A proper response involves analysis of the region of the country, your credit rating — which determines how much and what kind of The loan you qualify for—and more. One thing many people don’t accept at this point is that it took 40 years to get to 0% interest rates. It’s unlikely we’ll experience that again anytime soon.”

Learn more about your mortgage purchase options and rate qualifications here.