Here’s How to Move Forward Even if Mortgage Rates Don’t Drop Much
Many prospective homeowners are holding out, hoping mortgage rates will fall before they take the plunge. But will that actually happen? According to the latest forecasts, experts expect some decline, but it might not be as much as many are hoping for.
The good news? Even if rates don’t drop as drastically as expected, there are still plenty of ways to make buying a home more affordable right now.
How Much Will Mortgage Rates Actually Drop?
A few months ago, some experts were predicting mortgage rates could drop below 6% by the end of the year. However, recent projectinos have adjusted those expectations.
Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo now foresee rates stablizing closer to 6.5% by the end of the year. So, if you’re waiting for a significant drop before making a move, you might be waiting longer than you think. And if you need to relocate soon due to life changes,like a new job, growing family, or other personal reasons, waiting for lower rates might not be an option.
Explore Creative Financing Options in Today’s Market
If you’re ready to buy but are concerned about current rates, don’t worry, there are still creative financing options to help make homeownership a reality sooner rather than later. Here are three options to discuss with your lender:
- Mortgage Buydowns: A mortgage buydown lets you pay an upfront fee to lower your mortgage rate for a set period of time. This can be a smart option if you want lower monthly payments early on. In fact, nearly 30% of agents say first-time homebuyers are increasingly requesting buydowns from sellers to help make buying a home more affordable now.
- Adjustable-Rate Mortgages (ARMs): An adjustable=rate mortgage (ARM) can offer a lower initial rate compared to a traditional 30-years fixed-rate mortgage. If you expect rates to drop in the coming years or plan to refinance later, an ARM might be a good option for you.
Today’s ARMs are different from those that led to the housing crisis of the mid-2000s. Unlike in the past, lenders now verify borrowers’ ability to cover future higher payments, ensuring that borrowers are qualified for the fuller term of the loan, not just the initial low rate. This significantly reduces the risk compared to previous years. - Assumable Mortgages: As assumable mortgage allows you to take over the seller’s exsisting loan, including their lower mortgage rate. With over 11 million homes eligible for this option, it could be a great way to lock in a better rate than what’s currently available in the market.
Bottom Line: Don’t Wait for Rates to Drop Drastically
Waiting for a significant drop in mortgage rates may not be the best strategy. Instead, consider options like buydowns, ARMs, or assumable mortgages to make homeownership more affordable now. Reach out to one of our Mortgage Officers to explore what makes the most sense for you and your future.
