With these interest rates, is it a good time to buy my first house?

Hey, this is Rob, Your Realtor, and today I want to address the question, “With these interest rates, is it a good time to buy my first house?” The short answer is YES and I’m about to tell you why.

Today’s interest rate (September 12) of 7.12% for a 30-year, fixed rate mortgage and this has some people holding off or at least hesitating on making that new home purchase believing, as the experts predict, interest rates will drop towards the end of the year and into next year. But if you are ready to move (especially if you are renting), is this the best option? It is the best option, and here’s why.

Historically speaking, we are still below the 50-year interest rate average (see chart above). Still, 7+% interest may feel high, especially after the pandemic market, but have you considered that, as a renter, you are paying 100% interest? Zero percent of your monthly payment is going toward premium on your home and building equity. Every month that you continue to pay rent, you are losing equity that you could be building in your home.

You may look at that and say, “OK, but if rates may drop, shouldn’t I wait?” If rates could drop, the question becomes, “How can I purchase now to begin building equity in my own home and benefit if/when rates drop?” That’s a GREAT question, and a solution that might work for you is buying down the rate. You may be familiar with rate buy-downs, but the one I am talking about specifically is the 2-1 buy down. The way this works is, you “buy” this rate reduction and pay for it up front at closing. For the first year of your loan, you get a 2% interest rate reduction on your house payments. In the second year, you get a 1% interest rate reduction. The third year, you are paying the interest rate you got with your loan BUT…if interest rates have dropped by this time, you can refinance to the lower rate, and you will have been building equity for yourself/your family because you own a home and are not paying rent on someone else’s home.

In another video I will tell you about the incredible buy-down deal another client of mine got moving into their new-construction home. AND, I’ll talk about a strategy we could use to get the seller to pay YOUR rate buy down. I’m Rob, your Realtor and my passion as an agent is helping renters become homeowners. Let’s have a conversation to see how I might be able to help YOU move into your own home. You can reach out through any of my social media platforms, or all my contact information may be found on my website rob-hurt.com. I would love to join you on your home ownership journey, let’s talk!