Yes, the current interest rates might make you cringe at the thought of higher monthly payments and consider postponing your homebuying plans. But before you throw in the towel, you may be surprised to know there are some benefits to buying a home when interest rates are high. Let’s look at 5 advantages of buying a home in a high-interest market.
Fewer Buyers = Less Competition
Some buyers have looked at the high interest rates and decided to wait until they decrease before buying a home. This can help you get the home you want, since there may not be as many people bidding on it. Your purchasing process may go considerably smoother in a high-interest market.
Less Risky Negotiations
In a hot buyer’s market, you would need to do everything you could to land the home you want. This pressure may make you agree to some risky moves, like waving contingencies during negotiations. And, while doing this may get you into the home, you might end up with costly issues that could bust your budget soon after moving in. In a less-crowded market, you won’t need to make these high-risk moves to get the home you want.
It’s Still Better Than Renting
If you’re renting and worried about the high interest rates, consider how much you’re shelling out to your landlord every month. Chances are also good you’ve faced a recent rent increase. Even with high interest rates, you’re better off buying than renting. With traditional loans or FHA loans TN, you can get into a home of your own and start building equity sooner rather than later.
You’ll Get Tax Benefits
Mortgage interest payments are tax-deductible for many homeowners, and that can provide savings on your annual tax bill. While tax laws and regulations can change, the possibility of deducting mortgage interest can help offset the impact of higher interest rates.
It Costs Money To Wait … and You Can Always Refinance!
This isn’t just a benefit of a high-interest market. However, it’s a big advantage of homebuying that you should keep in mind. It’s important to consider the additional expenses of waiting 1, 2 or 3 years to purchase, rather than buying now and refinancing when rates drop.
While waiting a few months for a lower interest rate can save you some money on monthly payments, those savings will be eclipsed by the losses from property appreciation and amortization – and the gap gets larger the longer you wait. For example, for a 30-year conventional fixed mortgage on a home valued at $300,000, that total cost of waiting six months is $5,576. Waiting three years, the cost of waiting balloons to $49,651.
You’re NEVER locked into mortgage loan terms forever. If rates come down in a year or two (or whenever), you can go back to your loan officer and refinance into a lower interest rate.
If you’re thinking about delaying your home purchasing plans because of the high interest rates, think carefully before you pull the plug. Even with high interest, there are many benefits of owning a home. And, with fewer buyers competing for each property, you’re more likely to land the home you want.
Reach out to MIG today to talk to one of our experienced loan officers. They can review your homebuying options and help you get pre-approved for a mortgage loan.