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Mortgage rates have risen as of late. Driven by the Federal Reserve’s efforts to curb inflation by raising federal funds rates, average 30-year mortgage rate It peaked at 7.79% on October 26, 2023, according to the Federal Reserve Bank of St. Louis. And while mortgage rates have seen quite a bit of movement since then, they appear to be cooling.
In fact, the current average 30-year mortgage rate is at a 2-month low. And, this may be a signal that now it is time to buy a new house. After all, low mortgage rates usually result in lower monthly payments and lower overall cost of home ownership.
Considering the new rate change, we asked multiple experts if it’s now right time to buy a house. And, those we asked agreed that it could be. Find out why below.
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Why you might want to buy a home now
There are many factors to consider when deciding whether it is time to buy a new home. Here’s why now might be a smart time to act, according to the experts we spoke to:
Lower mortgage rates can give you more options
Lower mortgage rates can lower the cost of home ownership. “Mortgage rates are down from highs in late 2023,” explains Ronnie Thompson, investment advisor representative and owner of True North Advisors, a financial planning firm. “Home mortgage interest costs are currently at a two-month low.”
And, a reduced cost of ownership can open the door to more options. “Low interest rates improve housing affordability and increase purchasing power,” explains Michael Ross, area manager at Mutual of Omaha Mortgage. This increased purchasing power can mean you have access to options you couldn’t afford before.
But lower mortgage rates aren’t the only reason now may be the time to buy a new home.
Take advantage of today’s reduced rates by closing on your mortgage now.
Increased inventory can lead to lower prices
Supply and demand play a significant role in the price of almost anything – houses are no different. And, inventory are on the rise in some markets, which can work in your favor.
“Many markets are experiencing longer market times and higher inventory levels,” says Ross. That means buying now could result in “more choice and potentially better bargaining power.”
“Inventory for homes is increasing, which has caused them to stay on the market longer and, in turn, market prices are falling,” says Thompson in agreement with Ross.
Further potential negotiating leverage
The average homeowner in the United States has more than $200,000 in tangible home equity. And so high net capital the average may mean that now is the time to buy.
“A lot of houses are equity rich,” explains Dutch Mendenhall, CEO of RADD Companies, a conglomerate of financial services companies. He says that high amounts of capital can provide bargaining leverage.
After all, a homeowner may be more likely to negotiate the sale price of their home if they have enough equity to work with. Conversely, there may be less room for negotiation if the homeowner owes nearly what they list the home for.
Buying a home is not just a financial move
While all of the above factors suggest it’s a good time to buy a home, there’s more to consider than finances when house hunting. “I always tell clients that buying what should be your ‘dream home’ is more than a financial move,” explains Steve Azoury, ChFC and owner of financial planning firm, Azoury Financial. “You’re there every day of your life and you want to love it, not just like it.”
So it might be a good idea to leave aside interest rates, inventory levels, and equity levels. If you find it the home of your dreamsit can be time to buy – regardless of current market conditions. “There really is no perfect time to buy a home,” says Azoury. “But if you buy a new home now, you’ll likely want to refinance if and when interest rates come down.”
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After all
30-year mortgage rates are currently at a 2-month low. That, combined with rising inventories and higher equity amounts, can make now a great time to buy a home — especially if you consider the financial aspects of it. But buying a home is not just a financial decision. It’s also important to make sure the home you buy is one you want to live in.
Find out how affordable buying your home can be now.