Should You Wait Until Interest Rates Drop?
Waiting for a lower rate might slightly reduce your monthly payment, but rising home prices and lost equity-building opportunities often outweigh the benefit. Buying sooner allows you to lock in your home’s price and start building long-term wealth. Plus, if rates drop later, you can always explore refinancing to lower your payment—while rent typically keeps increasing.
Meet Sarah, a first-time homebuyer. She is looking at a $500,000 home. At a 7%* interest rate on a 30-year mortgage, her monthly principal and interest payment would be around $3,326*. She thinks about waiting a year, hoping rates drop to 6%*. At 6%*, the monthly payment on a $500,000 mortgage is about $2,998*—a clear savings.
But if prices rise in the meantime—say that $500,000 home jumps to $525,000—Sarah’s monthly payment at 6% becomes $3,147*, which is closer to what she would have paid at 7%* anyway. Meanwhile, she’s missed out on a year’s worth of potential equity and possibly paid rent instead.
Disclaimer: The values marked with * are rough estimates for informational purposes only. Actual amounts may vary based on individual circumstances, market conditions, loan terms, and other factors. This does not constitute financial advice—please consult a professional for precise calculations and guidance.
Opportunity for Growth: By purchasing now, Sarah locks in today’s home price and starts building equity right away. Even if rates drop later, she could refinance to secure a lower payment—but she won’t miss out on potential appreciation or continue throwing money at rent.
Opportunity Cost of Waiting: If Sarah waits and prices climb, that extra cost may offset—or even exceed—her savings from a slightly lower interest rate. Over the long term, missing out on appreciation and the chance to build home equity can be a bigger setback than paying a bit more in interest initially.
Unsure What’s Right for You?
At David Haley Mortgage, we help first-time buyers weigh the pros and cons of buying now vs. waiting—so you can make a smart choice for your future. Contact us today to explore your options!
