News

3 questions homebuyers should ask with interest rates paused


With the rate climate changing, homebuyers should be prepared with answers to some important questions.

miodrag ignjatovic/Getty Images


Homebuyers had a difficult 2023. Thanks to inflation and elevated interest rates meant to tame it, mortgage rates hit their highest point since 2000. Housing inventory was also low as many owners elected to remain put instead of selling – and losing their low interest rate. But as the year evolved inflation cooled and interest rates were paused. By December, the Federal Reserve was hinting at interest rate cuts to come in 2024 and mortgage rates started to fall in anticipation of that move.

That anticipation remains high now after the Fed elected to keep interest rates paused this week in its first 2024 meeting. And rate cuts now seem imminent, with the first cut of 2024 possibly coming as soon as the next Fed meeting in March. With this context, homebuyers in today’s market have questions they may want to start thinking about. Below, we’ll break down three questions homebuyers should ask with interest rates on pause.

In the market to buy a home? See what mortgage rate you could qualify for here now.

3 questions homebuyers should ask with interest rates paused

While each homebuyer’s considerations are different, there are some common questions the majority of buyers may want to start preparing the answers to now. Here are three of them:

Should I wait for interest rates to fall?

It can be tempting to wait for mortgage interest rates to drop but the details matter. There’s no guarantee that mortgage rates will fall — nor does anyone know when they will or by how much. That last factor is particularly important as most don’t expect the Fed to cut the benchmark interest rate (which influences mortgage rates) more than 75 basis points this year. 

Think of three cuts of 25 basis points each. And while that will provide substantial relief for buyers, it will still be far from the 3% rates many were accustomed to securing in recent years. 

Ultimately, the answer to this question will be a personal one dependent upon multiple factors and your risk tolerance. But crunch the numbers and compare what you can get now against what you may get later in 2024 and see which will work best for you.

Get started here now.

What will happen to the market if rates fall?

All current homebuyers are seemingly waiting for the same thing – for rates to fall. But what will happen to the market when they do? That could lead to new complications. More buyers on the market could lead to increased competition and, arguably, higher prices to take advantage of that growing pool. 

On the other hand, lower rates could convince existing owners to make a move, possibly increasing today’s tight inventory. Still, it’s worth contemplating what the market could soon look like if rates fall. It may not be as advantageous as some buyers may have hoped.

Am I ready to act quickly?

Today’s mortgage rate environment is fluid and rates change rapidly. Rates fell in December simply on the speculation that rates could get cut this year. What will happen, then, when rates are cut? In this environment, it pays to be proactive and buyers should be ready to lock in a rate when and if they become favorable. 

That means, first, improving your credit so that your score is as high as possible (the best rates and terms will be reserved for those buyers with the best credit). But it also may mean getting pre-approved for a mortgage now so that you’re ready to act when the home you want is listed.

Learn more about getting pre-approved for a mortgage today.

The bottom line

Mortgage rates have been elevated for an extended period but they’ve been falling lately and could fall further as 2024 evolves. In this environment it helps homebuyers to have the answers to the above questions — or, at a minimum, they should start thinking about the potential answers. By asking these questions now buyers will be better prepared to buy a home and save money both on the purchase and the rate they secure from their lender. 



Source link

See also  43-Year-Old Man Accused Of Threatening, Charging Hollywood Police Officer
Good Ads

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button

Adblock Detected

Please Disable AdBlock