Should You Wait for 3% Interest Rates to Return?

Should I wait for 3% rates?After a couple of years of record low interest rates at, or even below, 3%, you may be wondering if you should wait for the market to shift in that direction again. In recent weeks, we are seeing rates come down again and that has many buyers wondering if they should pause their buying plans and wait for a return to those historic lows. 

Whether you are looking for your first home, a vacation rental or investment property, or anything else in the Horseshoe Bay area, we would love to help you find it. Whenever the time is right for you, we are ready to partner with you in buying your ideal property in Texas Hill Country. Contact us any time to learn more. 

Understand the Context of 3% Rates

Experts say about 60%-65% of homeowners in America today were able to take advantage of the historic, record low interest rates that were near 3% in 2021. Those who were not in a position to buy or refinance during that time may feel that they missed their best opportunity, but it is essential to remember that today's rates, though double what they were two years ago, are still historically low. 

It is possible that rates will return again to 3%, but unlikely in the near future. Waiting for that specific number rather than figuring out what you can afford to invest in the current market is the real missed opportunity. 

Your Interest Rate at Closing is not Permanent

The interest rate you are given when you get pre-approved for your mortgage is not a permanent number. Remember that just like millions of Americans took advantage of those 3% rates through refinancing a couple of years ago, you can keep yourself aware of shifting rates and refinance if they dip below the rate you had when you purchased. 

If you can afford the payment with the higher rate, buying now and refinancing if rates dip again is your best move. In the case that interest rates do dip significantly in the future, we can reasonably expect that home values will also begin to rapidly rise. 

This means those who are in the most advantageous position if rates take a major dip again in the future are those who already own. They can refinance their property, potentially cashing in on significant equity in the process. On the other hand, if you wait for rates to come down, you will be stuck with a higher purchase price to go with those low interest rates. 

Remember the Overall Trend of Real Estate Investments is Upward

As you plan out the timing of your real estate investment, keep in mind that the most important factor is your personal finances. Timing the market perfectly is a risky game to play, with so many factors outside your control. 

However, your personal finances are far more personally controllable. If you find a property you can afford in the current market conditions, you can rest easy knowing that while there are highs and lows in the market, over time the general trend is always upward. No matter what your rate and purchase price now, you can reasonably expect that in 15 years from now you will be benefiting from significant appreciation. On the other hand, you can wait 15 years for what feels like optimal market conditions and miss your investment opportunity entirely. 

Ready to begin the search for your next investment? Contact us any time to get started.

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