Sherry Campbell | November 7, 2022
I hear this question every day, and daily, I respond with “I would rather buy a home in today’s market than the market we were in 6 months ago.”
With interest rates double what they were 6 months ago, I know this seems like a crazy response, but let me point out a few factors that will help buyers get their heads around this response.
I realize that 7% interest rates are a tough pill to swallow when at the same time last year interest rates were 3.09% on average. To put this in perspective, if you purchase a $400,000 home your PMI payment today is $2661 versus $1701 a year ago. The difference is an extra monthly payment of $960!
While this extra monthly payment may price some buyers out of the market, think about the fact that the same house that was priced at $400,000 6 months ago is now priced at $360,000 so that monthly payment is now $2395—a $266/month savings!
Professional Realtors and Mortgage Companies are offering some alternatives to help today’s buyer navigate through this new market with some financing alternatives that can get buyers into the home of their dreams until they can refinance at a lower interest rate.
At Energy Realty, we are working with our mortgage partners to offer alternatives like a 2/1 buydown that can lower your interest rate to 5.2% the first year. That now lowers the payment on the same home purchase to $1933, which is almost in line with the monthly payment that you saw on the same house 6 months ago.
Everything is relative, including rising interest rates. Buyers will need to make a decision to buy now at a better price or rent until interest rates drop. If the monthly payment is the same as you are paying for rent, I would vote for homeownership all day long.
Every month I share articles that provide up-to-date information about the housing market and mortgage rates, so please make sure you read on. If you don’t like to read, I will follow up with a Market Update video.
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