Should I Buy a House Now, or Wait?

Deciding whether to buy a house now or wait depends on several factors, including your financial situation, the current housing market, and future mortgage rate predictions. The current housing market has caused many prospective buyers to wait for better conditions, but there is no guarantee that things will improve considerably anytime soon. 

While mortgage rates have backed off from where they were in late 2023, current mortgage rates are relatively high compared to historical averages and experts predict mortgage rates may only slightly decrease over the next year. There is no guarantee that rates will go down significantly, even if the Federal Reserve continues to cut interest rates. In fact, the past couple of Fed rate cuts have not brought lower rates with them.  

Ultimately, whether it is a good time to buy really depends on your personal circumstances. 

The housing market, for example, could be a factor and is influenced by variables like inflation, employment data, and housing supply challenges. If local home values are increasing and inventory is low, buying now may be the right decision – assuming you are financially stable and can afford the higher rates. If you find the right place, buying now helps you avoid potential mortgage rate increases later and allows the possibility of refinancing later down the line if rates decrease. 

You could also consider an adjustable-rate mortgage (ARM), but it depends on your personal circumstances and financial goals. ARMs often have lower initial interest rates compared to fixed-rate mortgages, which can make your monthly payments more affordable in the short term. If interest rates remain stable or decrease, you could save money over the life of the loan. If you plan to sell or refinance before the adjustable period begins, ARMs can also be beneficial. If rates have decreased since you purchased the home, the rate during the adjustable period may be lower than the initial rate. The biggest risk is a significant rise in interest rates, which could lead to higher monthly payments when the adjustable-rate period begins. 

If your credit score is strong, your employment is stable, and you have enough savings to cover a down payment and closing costs, buying now can still be a smart move in a high-interest rate environment. However, if you are not in a rush and believe rates might drop further, waiting could be more beneficial. 

If you are a current homeowner wanting a larger house but don’t want to lose your low fixed rate mortgage with a new home purchase, a second lien home equity loan or home improvement loan to renovate your current house is another option to consider. Home equity loans and home improvement loans exist side-by-side with your mortgage. Aside from using your property as collateral, it does not affect your current mortgage in any way. 

While home equity and home improvements rates are typically higher than first lien purchase money loans, they allow you to tap into your home’s current and future value without disturbing your current lower fixed rate loan. On a blended-rate basis, your interest rate may still be lower than current mortgage interest rates. 

The decision to buy a new home now or wait, or even to improve your current home, is a deeply personal one and depends on weighing all the facts. There is no right or wrong answer. You should carefully evaluate your situation, consider the potential benefits and risks, talk to your financial advisor or banker, and make an informed choice that aligns with your long-term goals.  

Whatever decision you make, ensuring that you are financially prepared and comfortable with your decision is key.