High interest rates have many Americans asking themselves if they should buy a home now and
refinance later, or wait until rates fall. Here is what some real estate and mortgage professionals think.
"Only the mortgage rate, can be renegotiated. Once a home is purchased, you
can't renegotiate the price." So if a home is attractively priced, it would be
better to pull the trigger than if mortgage rates are attractive and the home
price is high.
Robert Johnson, a professor at Heider College of Business
People who buy when interest rates are high have the advantage of less
competition and greater negotiation power. "Many homebuyers will potentially
refinance their 15 or 30-year mortgages more than once, so they have an
opportunity to build equity and wealth."
Afifa Saburi, a senior researcher at Veterans United Home Loans
It's hard to consider mortgage rates in a financial decision when it's unclear which direction they
will move. "Typically, the rule of thumb is that one wouldn't finance unless the new mortgage rate
to lock in is at least 0.75% to 1% lower than the established rate.
"The Fed has jawboned exhaustively about their intention to keep rates at present levels once
their hiking campaign is over, but if the U.S. enters a recession, it's not at all clear that they won't
drop rates. That's been their playbook since the Greenspan era."
Peter C. Earle, an economist at the American Institute for Economic Research
"Home prices in Virginia were up 3.7% year-over-year in June. At the same time, the number of
homes sold fell 18.8% and the number of homes for sale fell 21.6%. The scarcity of homes in hot
markets like Richmond, Roanoke, and Winchester make these seller's markets."
"In spite of higher mortgage rates and a seller's market, if the right home becomes available in the
right location, you should buy if it is within your means. It is far more likely you'll be able to sell
the home for a higher price in the future if the location is prime."
Chuck Vander Stelt, Quadwalls
Some experts also advise that if you are able to pay down the principal on a high mortgage rate until you can refinance for a lower rate, regardless of the price you've paid for the home, you can save tens of thousands of dollars on your loan.
If the right house became available, and you had to pay more than you'd thought, would you go ahead and pull the trigger on the purchase? Let us know in the comments.
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Sources: CBS, Quadwalls, Redfin