The Good.
As a buyer, lower interest rates mean a lower monthly payment for the same loan amount. For example, at today’s rates versus what they were earlier this year, you would save roughly $200/month on conventional loans. On government-backed loans (FHA/VA/USDA) that difference is over $300/month!
Lower rates can also mean that with the same financial picture (income, debts, ect) that you may qualify for a higher loan amount. That house you loved that was just out of your price range? It may now be within reach!
Contact your lender for information specific to your circumstances. Of course, we can offer a referral to a lender if you need one!
The Bad.
While rates have begun dropping – increasing affordability for buyers – it is unlikely they will reach the historically low rates from the COVID era. There are STILL many would-be sellers that just cannot justify trading in their 2.75, 3.00, or even 4.25% loans for a higher rate. As a result, many aren’t participating in the traditional upgrade-cycle, opting instead to keep their current home.
Without those sellers’ homes on the market, inventory of available homes for sale – which had been creeping up during 2023 and 2024 – may drop.
Economics 101 teaches us that a flat or decreasing supply, coupled with an increasing demand, means things for buyers can get ugly.
The Ugly.
For most of 2023 and 2024, buyers could “browse” for their new home. With a few exceptions, homes stayed on the market longer, sellers were eager to review all offers, and the buying process overall was a bit more “leisurely.”
That is likely about to change. More buyers competing for a relatively constant amount of homes means buyers must be prepared:
- Pre-approval. Always a great idea. Now a necessity. Offers without pre-approval will go to the bottom of the offer pile…if they make it into the pile at all.
- Financial house in order. Know you budget. Have you required lending documents ready.
- Commitment. You may be one of several offers on any given house. You may have to make several offers on several different properties. Make a commitment to the process and don’t get discouraged.
- Pulling the trigger. You snooze (as in, “I’m going to sleep on it…”) you lose. A home is either right for you or it isn’t. No amount of sleep, let alone time or discussion, is going to change that. Now, a home purchase is a BIG deal and shouldn’t be entered into lightly, but the time for discussion, the time for research, the time for assigning priorities to your wish list is BEFORE you tour a home, not after.