Every week I talk to a first time buyer who tells me they're gonna wait for rates to drop before they start looking. And I get it, I really do. A 7% rate looks scary compared to the 3% stuff people were locking in back in 2021. But here's the thing, waiting is prolly costing you more than that rate ever will.
Let me explain what I mean. Say you're looking at a $350,000 home right now. You decide to wait six months for rates to maybe come down half a percent. Cool cool cool, sounds smart on paper. But in those six months, home prices in most markets have gone up 2 to 4 percent based on what I've been seeing on the MLS this spring. That's potentially $7,000 to $14,000 more on the purchase price. The monthly savings from that slightly lower rate? Prolly around $80 to $100. So you'd need years just to break even on the price increase you ate by waiting.
I think a lot of first time buyers focus on the rate because it's the one number that feels simple. One number, easy to compare. But your actual monthly payment is a mix of the rate, the price, your down payment, taxes, insurance. It's a bunch of moving pieces and the rate is just one of them.
My honest take, and this is where some people disagree with me, is that you should buy when you find the right home at a price that works for your budget. Period. Rates can be refinanced later. You can't go back in time and buy that house at last year's price.
I'm not saying throw caution to the wind and buy something you can't afford. That's obviously not the move. What I am saying is don't let a number on a screen keep you from building equity and getting into a home that checks your boxes. Talk to a lender, get your real numbers, and then make a decision based on what your life actually looks like right now.
So if you're sitting on the sidelines waiting for some magic rate to appear, maybe ask yourself this. What's that wait actually costing you?