Since mortgage interest rates have increased significantly in the last few weeks, many homebuyers are inquiring what this means to them. The following may help in making a more informed decision.
When mortgage rates rise, purchasing power is impacted because it raises the cost of buying a home and limits what is comfortably affordable. Shopping at a particular price point may change considerably with mortgage rates rising, as the amount you can afford to borrow decreases. This usually means buyers must seek homes at a different price point.
Are mortgage rates going to go down? Experts say that the already high rates are going to get higher. Waiting for mortgage rates to drop may take a while as the Federal Reserve works to get inflation under control.
Renting as an alternative during that wait is likely to get more expensive as well. Both buying and renting may both cost more than they did last year. With homeownership however, you are also gaining equity over time which grows net worth and ultimately personal wealth.
Each person’s situation is unique. To make the best decision for you, partner with a trusted real estate professional in your home search to better understand how mortgage rates impact your personal situation.