Understanding interest rates can save you thousands on your future home.
Are you one of the prospective homebuyers contemplating the idea of purchasing a new home? It’s common to feel a sense of confusion, fear, and uncertainty when it comes to monthly payments, especially with fluctuating interest rates. Today, I want to address this concern because I’ve spoken to many buyers who believe it’s not the right time to buy due to high rates.
As a real estate professional dedicated to helping buyers achieve homeownership, I encourage a different approach. Let’s take the time to understand what you qualify for and educate ourselves about financing options. This way, when the perfect opportunity arises, you’ll be fully prepared to seize it.
Often, buyers I speak to wait until rates drop before seriously considering a home purchase. They decide to consult a lender to determine their monthly payments. However, real estate is always in motion, and great opportunities may pass you by if you’re unprepared.
That’s why we recommend speaking with a lender regardless of whether you plan to buy in a year, a month, or a decade. Understanding your financing options ensures that when the right moment arrives, you can act swiftly.
Now, let’s dive into the numbers. Just a month ago, interest rates were at 7.5%. If you were buying a $1,000,000 property with a 20% down payment and an 80% loan, your monthly payment would have been $6,665. But today, rates have dropped to 6.5%, resulting in a monthly payment of $6,128. That’s a substantial difference of $540.
But it gets even better. Some lenders offer a complimentary 12-month, one-point buy down. With this, your rate can drop to 5.5%, resulting in a monthly payment of $5,614, saving you even more.
If you’re willing to negotiate with the seller and secure a buydown with your lender, you could potentially lock in a 4.5% rate for the first 12 months, resulting in a monthly payment of $5,125. This is a significant difference, potentially saving you $1,500 compared to buying just a month ago at a 7.5% rate.
However, if you don’t consult with a lender and understand how rate fluctuations affect you, you may miss out on these opportunities. So, my best advice is this: If you have even a slight inkling of motivation to buy a property in 2024, talk to a lender now. Getting preapproved and understanding your financials carries no cost or obligation, but it empowers you with knowledge and puts you in the driver’s seat.
If you’re looking for a recommendation for a reliable lender, feel free to send me a message. Don’t let uncertainty hold you back from securing your dream home. Start the conversation today!