Leave a Message

Thank you for your message. We will be in touch with you shortly.

Explore Our Properties

The Cost of Waiting for Mortgage Rates To Go Down

The Gentry Team October 4, 2022

 
Mortgage rates have increased significantly in recent weeks. And that may mean you have questions about what this means for you if you’re planning to buy a home. Here’s some information that can help you make an informed decision when you set your homebuying plans.
 

The Impact of Rising Mortgage Rates

As mortgage rates rise, they impact your purchasing power by raising the cost of buying a home and limiting how much you can comfortably afford. Here’s how it works.
 
Let’s assume you want to buy a $400,000 home (the median-priced home according to the National Association of Realtors is $389,500). If you’re trying to shop at that price point and keep your monthly payment about $2,500-2,600 or below, here’s how your purchasing power can change as mortgage rates climb (see chart below). The red shows payments above that threshold and the green indicates a payment within your target range.
 
 
As the chart shows, as rates go up, the amount you can afford to borrow decreases and that may mean you have to look at homes at a different price point. That’s why it’s important to work with a real estate advisor to understand how mortgage rates impact your monthly mortgage payment at various home loan amounts.
 

Are Mortgage Rates Going To Go Down?

The rise in mortgage rates and the resulting decrease in purchasing power may leave you wondering if you should wait for rates to go down before making your purchase. Realtor says this about where rates could go from here:
 
“Many homebuyers likely winced; upon hearing that the Federal Reserve yet again boosted its short-term interest rates by three-quarters of a percentage point—a move that’s pushing mortgage rates through the roof. And the already high rates are just going to get higher.”
 
So, if you’re waiting for mortgage rates to drop, you may be waiting for a while as the Federal Reserve works to get inflation under control.
 
And if you’re considering renting as your alternative while you wait it out, remember that’s going to get more expensive with time too. As Nadia Evangelou, Senior Economist and Director of Forecasting at the National Association of Realtors (NAR), says:
 
“There is no doubt that these higher rates hurt housing affordability. Nevertheless, apart from borrowing costs, rents additionally rose at their highest pace in nearly four decades.”
 
Basically, it is true that it costs more to buy a home today than it did last year, but the same is true for renting. This means, either way, you’re going to be paying more. The difference is, with homeownership, you’re also gaining equity over time which will help grow your net worth. The question now becomes: what makes more sense for you?
 

Bottom Line

Each person’s situation is unique. To make the best decision for you, let’s connect to explore your options.

Recent Blog Posts

Stay up to date on the latest real estate trends.

What’s Next for Home Prices and Mortgage Rates?

Here are what experts are saying about both prices and rates.

The Best Time To Sell Your House Is When Others Aren’t Selling

If you’re ready to sell now, beat the competition before it comes onto the market.

Why Buying or Selling a Home Helps the Economy and Your Community

You’re not just meeting your own needs, you’re also making a positive impact on the community.

What Everyone’s Getting Wrong About the Rise in New Home Inventory

You may have seen talk online that new home inventory is at its highest level since the crash.

History Shows the Housing Market Always Recovers

Every slowdown in the past has eventually given way to more activity, and this one will too.

Should You Still Expect a Bidding War?

If concerns about bidding wars have been holding you back, it may be time to take another look.

From Frenzy to Breathing Room: Buyers Finally Have Time Again

If you tried to buy a home a few years ago, you probably still remember the frenzy.

Condos Could Be a Win for Today’s Buyers

For first-time buyers, they can be a smart way to get into homeownership without stretching your budget.

More Contracts Are Falling Through. Here’s How To Get Ahead

When you sell a house, the last thing you want is for the deal to fall apart right before closing.

View All

Work With Real Locals

If working with a team that truly gives back to the community matters to you, we would make a great match. Reach out today to get started on buying or selling your home with a team that knows Moore County inside and out. With decades in the industry and an exceptional team of sales specialists, The Gentry Team has sold more homes than any other real estate firm in Moore County—and more than the total volume of most real estate companies in the region. This level of experience is unmatched, allowing us to help you sell your home for top value while anticipating and handling every detail along the way. We work collaboratively, combining our collective expertise to achieve the very best results for our clients. It is an approach built on trust, teamwork, and proven success. When you work with real locals, you get real results.

Contact Us
Get in Touch
Contact Details

THE GENTRY TEAM

(910) 295-7100

[email protected]



5 Chinquapin Rd
Pinehurst NC 28374