What You Should Do If Mortgage Rates Stay High
With the 30-year mortgage rates reaching an unprecedented 7.14%, mortgage applications have declined, which is understandable. It remains uncertain whether these rates will decrease anytime soon, as Sam Khater, the chief economist at Freddie Mac, pointed out that high rates are deterring many potential homebuyers from entering the market.
However, if you are still interested in purchasing a house, there is no need to lose hope. Real estate experts offer five actionable tips on how to navigate the high mortgage rates:
Buy Now: Experts suggest that waiting for mortgage rates to fall may not be worth it. The current tight inventory and increasing number of buyers entering the market are driving home prices up. Scholastica Gay Cororaton, the chief economist at Miami Realtors, advises that now is still the best time to buy a home since home prices are more likely to increase than decrease. Even if the rate falls back to 6.5%, assuming a 5% appreciation, homebuyers would still pay more in mortgage next year.
Consider Refinancing if You Already Own: For current homeowners in search of a new house, it might be more beneficial to consider refinancing their existing mortgage for a lower rate, if possible. This allows them to save money that can be used for their next down payment while waiting for better market conditions.
Explore Other Homeownership Options: Being creative can help you achieve homeownership. Some first-time buyers purchase homes with their parents, and multigenerational living is becoming more common. Additionally, some homebuyers look for properties with rental income potential, such as duplexes or homes with extra space, to help cover mortgage payments.
Investigate Alternative Financing: Coping with high mortgage rates may involve exploring alternative financing solutions. First-time homebuyers can save money with homebuyer programs that offer lower rates, down payment assistance, and tax incentives, according to Amy Crawford, a mortgage banker at Atlantic Bay Mortgage Group.
Remember, while the high mortgage rates may be discouraging, there are still viable options for pursuing homeownership. Each individual's financial situation and goals will dictate the best course of action. It is essential to consult with financial advisors and real estate professionals to make well-informed decisions.
Source: GO Banking Rates