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How often do we hear from Realtors that it’s always a good time to buy? We can’t help but wonder – is this just sales talk? Are they trying to trick me into buying so they can close a deal?
We get it. The idea that it’s always a good time to buy feels too good to be true. Is it possible that maybe, just maybe, Realtors might not be so crazy for saying this?
Let’s break it down:
One of the main determinants of the housing market is the interest rate. When purchasing a home with a loan, the lender determines how much a payment you can afford. That payment increases when the interest rate are higher.
When interest rates are low, it’s a great time to buy. Here’s why:
Pros:
- You will likely have a lower mortgage payment because interest rates are lower.
- The bank will approve you for a higher loan, which means you can afford a home at a higher price point.
Cons:
- The market will be highly competitive because more people will benefit from lower interest rates.
- You’ll need creative strategies like bigger down payments, waiving inspections, or writing a personal letter to stand out.
Recap: When interest rates are low, you have more money to spend, but more competition and less negotiating power..
What about when interest rates are high? Is it still a great time to buy? Yes! Here’s why:
Pros:
- It’s more likely you will have an easier time getting an offer accepted because there is less competition as less buyers are intimidated by the high interest rates.
- If you submit an offer on a home, because of decreased competition, you won’t need to use any fancy tactics with your offer and might even get a deal.
Cons:
- The bank will approve you for less money due to the effect of interest rates on your monthly mortgage payment.
- Because your loan amount could limit your purchase price, the housing inventory you can afford may be slightly limited.
It’s also important to note that interest rates do fluctuate, so if you purchase a home with one interest rate, you always have the opportunity to refinance when interest rates drop.
Recap: When interest rates are high, you may have slightly less money to spend, but you have more negotiating power and less competition.
So, are Realtors lying? Not necessarily.
When Realtors tell you it’s always the right time to buy, they mean it. The ultimate goal of homeownership is to buy a home you love and pay yourself back through building home equity.
The key is finding the right agent who understands the market and keeps your best interest in mind. Fortunately for you, The Apartment Source has an expert team of sales agents.
For more information, give us a call: 773-404-9900 or email us at: info@apartmentsource.com
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