What a terrible, horrible, no good time this is for trying to buy a home.
The housing market has almost slammed to a halt this fall, due to a one-two punch of record home prices and 30-year mortgage rates that have just touched 8%.
In recent months we’ve met with frustrated homebuyers like Nicole Bouchard, who had to lower her buying budget.
“The cost of the house is still inflated,” she said. “And with rising mortgage rates, we had to look at what would we be able to afford.”
Others, like Carol Rayheim, gave up their hunt — at least temporarily — after being outbid several times this year.
“I kind of slowed down a bit from even looking,” a frustrated Rayheim said.
Should you wait for rates to fall?
With 30-year mortgage rates in October hitting 8% before settling down to 7.75% according to Nerdwallet, a $400,000 dollar home will cost you more than $1,000 a month more than 2 years ago.
But waiting for those rates to fall again may not be the smartest move, according to realtor Michelle Sloan of ReMax TIME.
“While you are on the sidelines waiting for those rates to come down, someone else is buying the home of your dreams,” Sloan said.
She suggests you:
- Get pre-approved for 7% to 8% rate, and plan to refinance a year or two down the road.
- Look at new homes, where many builders are now buying down rates, giving the buyers a lower rate than they’d find on the open market.
- Consider an lower adjustable rate mortgage, or ARM, which is usually a point or two lower.
“Instead of doing a 30-year fixed rate, you can do an adjustable rate mortgage,” she said. “And then you can refinance.”
Sloan also said you will face less competition this fall and winter, due to seasonal dropoff of buyers, and those high rates.
She cautions that if rates fall to 5% next spring, bidding wars will be back with a vengeance.
You have less competition right now, and should not have to bid well over asking price in most cases.
“Don’t give up,” she said. “Don’t stop looking.”
That way you don’t waste your money.
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