(WHTM)– The housing market has almost slammed to a halt this fall thanks to record home prices and eight percent mortgage rates, but waiting for those rates to fall again may not be the smartest move.
What a terrible, horrible, no-good time this is for trying to buy a home. In recent months we’ve with frustrated homebuyers like Nicole Bouchard who had to lower her buying budget.
“The cost of the house is still inflated, and rising mortgage rates, what would we be able to afford,” Bouchard said.
Others, like Carol Rayheim, gave up their hunt, at least temporarily, after being outbid several times.
“I kind of slowed down a bit from even looking,” Rayheim said.
And with 30-year mortgage rates in October touching eight percent, a $400,000 home will cost you more than $1,000 a month more than two years ago.
But most realtors say dropping out of the market now while rates are high, really doesn’t make sense. That’s because while you are on the sidelines waiting for those rates to come down, someone else is buying the home of your dreams.
Remax Realtor Michelle Sloan says to do the following:
- Take the seven to eight percent rate, and plan to refinance.
- Look at new homes, where builders are now buying down rates.
- Or consider an lower adjustable rate mortgage, or arm.
“Instead of doing a 30-year fixed rate, you can do an adjustable-rate mortgage. And then you can refinance.”
Also, Sloan cautions that if rates fall to five percent next year, bidding wars will be back. You have less competition right now.
“Don’t give up,” Sloan said. “Don’t stop looking.”
So keep house hunting even if you have to settle for seven percent or higher: history shows those rates always come down over time. That way you get a home and don’t waste your money.