One of the things we hear most these days from people who are looking to buy or sell a home is we are holding off until the rates come down. After all, for potential sellers who intend to buy, the rational is it’s hard to go from a 3.0% interest rate to 6.5% interest rate. While this is certainly understandable, it can also be debilitating.
The benefit of waiting for interest rates drop before selling and then buying, is a lower monthly mortgage payment. This of course makes sense, as you never want to bind yourself to a mortgage you cannot afford. However, if you can afford the payment, the negative is you are trying to time the market as to when rates will drop. While this can be somewhat be predictable, more often than not it is an uncertainty. As a result, you are holding yourself (and potentially your family) back from living your best life based on something that is speculative. For example, the quality of life for a family of four (4) with another child on the way, living in a two (2) bedroom condominium (I submit) would be significantly better living in a 3+ bedroom home or unit, as there would be more space due to people not be as on-top of each other. This may result in your emotional and physical health increasing, which may be worth the additional monies.
Additionally, in residential mortgages, much more often than not there are no pre-payment penalties. This means that you can refinance at anytime, without having to pay a penalty. Consequently, if rates do drop after you buy your home, you can always try and refinance to the lower rate.
In light of this, if you can afford it, do not let higher interest rates get in the way of buying a home that is better suited to meet your current needs.
The information in this blog posting is for general information purposes only. Nothing in this blog or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. The information in this blog is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.