Last week a buyer called me and asked, "Should I wait for rates to come down more?" My honest answer is that I don't know where rates are going. Nobody does. What I can tell you is what a small move does to your monthly payment, and that's a lot more useful.
Here's the math I walked them through. Say you're buying an $800,000 condo with 20% down, so your loan is $640,000. At 6.5%, principal and interest comes to about $4,045 a month. At 6%, it's about $3,840. A half point saves you roughly $200 a month. That's real money. It's also not the difference between being able to afford a place and not.
Rates have eased a bit this fall, going by the lender rate sheets I've been seeing, and buyers are coming back off the sidelines. Open houses that felt quiet in August had a steady stream of people again this month.
So here's my take, and some agents won't love me saying it. For most first time buyers, waiting for rates to drop another full point is a bad plan. If rates fall that far, everyone who's been waiting jumps in at once. Now you're in a bidding war for the same three bedroom, the price goes up, and the savings you waited for are gone.
What I'd do this quarter is get fully pre-approved so you're working with your real number and not a guess. Then buy the home that works at today's payment. If rates drop enough later to cover the closing costs, you refinance. If they don't, you still have a payment you're comfortable with and you've been building equity the whole time.
For sellers, this is a good window. Buyers are back, but the spring listings haven't hit the market yet. If you were planning to list in March or April, let's talk about January. You'd be competing with fewer homes and getting in front of buyers who are already pre-approved and ready to go.
I'm not going to pretend I have some special system. What I do is sit down with you, run the numbers for your actual situation, and tell you straight what I'd do if I were you. No pressure, and no question is too basic.
Send me the price range you're looking at and I'll run your payment both ways. Sounds good? Talk soon.