Withhigh compared to where they were just a couple years ago and on the horizon, homebuyers may be in a tough spot when it comes to affording a new home.
But that doesn't mean that you should wait toif you find a house that fits your needs and budget. In fact, some experts believe there are some . If you're shopping for a home today, you should know your options to determine the best path forward for your long-term financial future.
Why you shouldn't wait for mortgage rates to drop
While it may seem like a good idea to wait for mortgage rates to drop before buying a home, many experts we've spoken to advise against doing so, even in.
For one, it's a common belief that you should secure the home that's best for you — even if it's not in the best rate environment. Plus, future lower rates could mean higher home prices than you'll find even today.
"Buyers should focus on their need for housing and the availability of homes in their desired location," David A. Krebs, a licensed mortgage broker at Dak Mortgage. "If they find a house that suits their needs, they should not hesitate due to high-interest rates."
There's also the possibility that today's mortgage rates represent arather than a short-term bump.
"If you look at the mortgage rate data going back to 1971, the average rate on a 30 year fixed rate mortgage is about 7.75%, which is roughly where we are today," says Bill Nelson, CFP, founder of Pacesetter Planning.
"Borrowers are looking at current rates and viewing them as abnormally high and thus, expecting that they're likely to fall in the next 5-10 years," he says. "But the reality is that current rates are average and the rates over the past decade or so have been abnormally low."
What you can do instead
Whether mortgage rates— or they stay near today's rates for the foreseeable future — it could be worth securing your ideal home if you find it today. There are a few things you can do to make sure you're prepared, no matter what the future brings.
Refinance in the future
There's always the possibility that rates will go down in the future, allowing you to save on your long-term payments with a. Continue to and keep up with the rate environment after you lock in the mortgage on your new home.
While it's not currently a good time to finance, "if you have received a new mortgage after 2021, I'd keep a close eye on mortgage rates to see when/if refinancing could make sense for you," says Jake Northrup, CFP, founder of Experience Your Wealth.
Just make sure you watch out for closing costs and other details, like your new term, monthly payments and overall amount paid.
Choose an affordable loan now
Of course, predicting the future is impossible — and you shouldn't rely on any financial unknown when it comes to a commitment as big as a mortgage.
"If the opportunity presents itself to refinance down the road, by all means take advantage of it as long as you will continue to stay in the home for long enough to recoup the closing costs," Nelson says.
He also warns against relying on this strategy, though. "But, do not count on refinancing just because you are used to seeing rates be lower than they are today."
Nelson has a practical approach. He recommends securing a fixed rate mortgage with a payment you can afford based on current rates. You can make sure you get theby applying with a great credit score and shopping around with different lenders to secure the best terms possible.
The bottom line
While mortgage rates, it's also possible that today's 6%-7% APRs are here to stay. If you're in the market for a new home, experts typically recommend focusing your search on the right home purchase — not the interest rate environment. In other words, it can pay off long-term to lock in a higher rate now rather than waiting to buy until rates eventually drop. You may get lucky with an opportunity to in the future, but you can also take action to secure the best possible rate that fits in your budget today.
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