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The housing market can feel like a rollercoaster ride, and mortgage rates are a big part of that. After rising last month and dampening buying activity, rates have dipped back below 7%. This is good news for potential homebuyers, but the question remains: Should you wait for rates to fall even further before moving?
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- Mortgage rates have slightly decreased to an average of 6.99% for a 30-year fixed-rate mortgage, down from 7.03% last week.
- Instead of waiting for rates to drop further, shopping around with different lenders is crucial to get the best possible rate.
- Besides mortgage rates, consider other factors like home prices, market competition, and personal needs.
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Mortgage Rates On A Rollercoaster, But Should You Wait to Buy?
Rates Down, Market Rebound Possible
Freddie Mac, a mortgage giant that tracks interest rates, reports that the average 30-year fixed-rate mortgage is currently hovering around 6.99%. This slightly decreases from last week’s 7.03% average and offers hope for those looking to purchase a home.
Economists at Freddie Mac even predict a modest decline in rates throughout the rest of 2024. Sam Khater, Freddie Mac’s chief economist, says, “Mortgage rates retreated this week… Rates are shy of 7%, and we expect them to decline modestly over the remainder of 2024.”
This potential decrease could reignite some buying activity that decreased with the previous rate hike. However, Khater cautions that the savings from waiting for slightly lower rates might be minimal.
Shopping Around for the Best Rate is Key
Instead of waiting for a potentially small rate drop, Khater emphasizes securing the best possible rate. This can be achieved by shopping around and comparing offers from multiple lenders.
A recent study by LendingTree revealed a compelling reason to do your homework: borrowers who obtain quotes from three or more lenders can save an average of $212 per month on their mortgage payment. That translates to a significant saving of $2,544 annually and a staggering $76,410 over the entire loan term!
Potential savings are even more substantial for homebuyers in states with traditionally high housing prices, like California, New Jersey, and Hawaii. By diligently shopping around for a lower rate, they could save a whopping $115,000 or more over the life of their loan.
Understanding Monthly Payments
So, what does this all mean for your monthly mortgage payment? For example, let’s take a typical $400,000 home with a 20% down payment. At today’s average rate of 6.99%, the estimated monthly mortgage payment would be around $2,127, according to Jessica Lautz, deputy chief economist at the National Association of REALTORS®.
Market Factors to Consider
Of course, mortgage rates are just one piece of the puzzle. Here are some other things to think about:
- Home Prices: Housing prices have been going up for a while now. They might go down a little if more houses become available for sale because of the recent rate hike, but there’s no guarantee of a significant drop.
- Competition: Depending on where you live, you might still be up against other buyers, especially if there aren’t many houses on the market. Waiting for rates to drop slightly could put you at a disadvantage if you’re in a bidding war with another buyer.
- Your Needs: Ultimately, the decision of when to buy a home is a personal one. Think about your situation, your plans, and how urgently you need a new place to live.
Conclusion
There’s no magic answer to whether to wait for lower rates. However, you can make a well-informed decision by carefully considering the potential savings from a slight rate decline, the benefits of getting the best possible rate now, and the overall housing market situation.
Remember, talking to a qualified mortgage professional can be super helpful. They can explain your options and help you find the best loan terms for your financial situation. So don’t be afraid to ask for help!
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