Fighting The Interest Rate

Fighting The Interest Rate: How You’re Actually Losing Money in the Long Run

Its one of the most common things I hear right now… 

“I’m just going to wait until the interest rates drop before I buy a house.” 

At first glance, that seems logical. After all, a lower rate means a lower monthly payment, right? But here’s the truth thats hard to hear… waiting for the “perfect rate” might actually be costing you more in the long run. 

The Myth of the Magic Interest Rate

Many buyers are holing out hope that mortgage rates will dip below 5% again. But based on current forecasts, that drop just isn’t on the near horizon. Even if rates decline slightly in 2025, they’re not expected to plunge. So, waiting a year or more for the dream rate might mean you’re holding out for something that may not return for years.. if ever. 

While You Wait, Home Values Rise 

Let’s say you’re waiting for a 1% drop in interest rates. In the meantime, home values in the markets continue to rise. If a $450,000 home appreciates just 5% in a year, that’s $22,500 in equity gains you missed out on by renting. That potential equity doesn’t just disappear, someone else gets it. And if you’re renting, it’s probably your landlord. 

Renting Isn’t Saving-Its Paying Someone Else’s Mortgage 

Every month you spend renting, you’re helping someone see build weather through Real Estate. You’re paying down their loan, while your rent climbs and you gain zero equity in return. That’s money you never get back. 

The Real Cost of Waiting

It’s easy to focus on monthly payment alone. But lower rates paired with higher home prices don’t always result in huge savings. And when demand surges again (as it will when rates drop), you’ll have more competition, less negotiating power, and fewer homes to choose from. A recent U.S. News survey even found out that 4 out of 5 buyers are waiting until the rates drop to make a move, which means the minute they drop, you’re entering a crowded, competitive market. 

Date The Rate, Marry The House 

I know you’ve heard it before, but it’s still true. You can always refinance your interest rate; you cant refinance your purchase price. But the house you love when it fits your life and your budget. The interest rate is temporary. The investment and appreciation is long term. 

So… When Does Buying Make Sense

• Even with higher interest rates, buying a home makes sense when: 
• -You can comfortably afford the monthly payment. 
• -Your mortgage (including taxes, insurance, HOA) is around 28% or less of your pre-tax income. 
• -You plan to stay in the home long enough to recoup closing costs and potentially avoid capital gains tax (typically 2+ years).
• -You have emergency savings and won’t be drained by the down payment or maintenance (expect 1% of the home’s value annually for upkeep). 

Interest rates shouldn’t be the sole reason you hit pause on your homeownership journey. If you’re financially ready and plan to stay in the home, the smartest move may be to buy now. Build the equity while others wait and refinance when rates improve. Real Estate is a long game, The winners are the ones who buy smart, not just cheap. 

Want more information or want to know what  your house’s worth is? Give me a call and I can run a free home value estimate. 

As Always,

Liberty