For most people, it takes years to save up for their first down payment to buy a house.
Signing on the dotted line(s) to buy a house is not a decision you make overnight, in other words.
So… what if you’ve been planning on buying a house, only for interest rates to skyrocket months at the same time?
Should you buy a house now?
Or should you wait?
Is it still worth it, even if you’re paying double the interest you would’ve the year before?
Or should you keep renting, rating for the housing market to swing back in your favor?
How to Decide on Buying a House: Long-Term Goals? Or Immediate Desire?
The answer of whether to go ahead and buy a house despite the higher interest rate comes down to your goals with buying that home.
Is it a house you plan to live in over the long term with you and your family?
Or did you have the idea of just purchasing a “starter home” and moving again a few years later?
Go Ahead and Buy: Long-Term Living
While right now may not be the best time to invest in a short-term real estate purchase due to the rising interest rates, it is still a good idea to stick to your long-term financial plan if buying a home and building equity in it is part of it.
After all, long-term home purchases usually work out with the real estate market, and you can always refinance your mortgage later if and when interest rates go down. (And if they keep going up, you’ll at least secure a lower rate than being stuck with a higher one in the future.)
Cost of Houses: What to Do?
Another concern I see a lot along with this is the cost of real estate right now.
Couples who buy a house now could be paying hundreds of dollars more per month on the same home (and at the same price) than they would have if they bought a home last year, which can be hard to swallow.
Fortunately, we are starting to see the skyrocketing price of houses stabilize, which at least means you’re not being stung with higher costs and higher interest rates at the same time.
But if you need to reduce your monthly payment a bit due to those higher interest rates, adjusting where you live could be a big help and open up more choices for house in less in-demand areas, especially if you no longer need to commute five days per week.
Need help planning your home purchase?
If you’re thinking of buying a home now, and want to be sure it’s the best financial move for your long-term wealth plans, book a discovery call with us. We’d love to talk to you about your financial planning!