This might seem obvious, but it isn’t actually. How many people do you know who rushed into buying a home in 2020 or 2021 because the rates were so low and now they’re wishing they had a different home, but they “can’t” move because they are not about to let go of their 2-3% interest rate? You might know a few. Most people know at least one. Why is that? Millions of Americans bought when the rates were low, but the house wasn’t right. Many people saw cheap rates and took a leap into whatever house they could win in an insane bidding war, only to find themselves stuck in that house because they’re too afraid to pay 6-7% on a home that makes far greater financial sense to them. They might have even overpaid for that house (overbid so much just to win over the other offers), and now they have no equity because prices are going down. If they sold now, they’d take a potential loss, or a big financial hit. This is when you should NOT buy a house.

I purchased in 2023 at a rate of 7%. I paid a little bit lower price, and the house is absolutely right for my family for the long haul. I knew I could afford the mortgage with that rate, and it was also a lower monthly payment than most local rents for a home or apartment that had half the bedrooms and size, with no yard or parking. This is a great example of when TO buy. I buy when the timing and house was right, not the rate. A year prior, we looked into buying and the prices were still insane, as were the bidding wars. We were constantly looking to see houses going so fast with dozens of offers over ask. We would have no equity for a decade, and if we needed to sell, it would hurt our family and our future. If we rushed into the decision, even if we didn’t need to move, we’d be stuck in a home that didn’t work for us but we couldn’t sell because prices are now down and we would owe more than it’s worth or have no more equity, aka down payment, for the next house. Buying just because, can cause significant financial ruin and take away from your quality of life just being in a home for many years that doesn’t work, simply because you were in such a rush to “win” and not think it all through. Don’t buy a house like this!

Regardless of the current interest rates, if the decision to purchase a home is made in haste and a “close enough” approach, you are probably going to regret that purchase in the near future; and not be able to correct your costly mistake. However, if the rates are higher but prices continue to drop, you have lots of time to really decide on that home, do your diligence before your offer is placed or accepted. You have more time to negotiate terms and price, to be very sure you’re making the best choice for your household. This is the “marry the house, date the rate” strategy. You don’t have to make a quick decision, filled with second-guessing and loss of sleep with a high price tag, and you have more than enough leeway to gain some equity in five years to make changes should your circumstances change again soon. If the home you have been eyeing for a long time, comes to market with lower rates, then of course, that also makes sense. The point is, NEVER make a huge and expensive decision based on an APR when your whole life also revolves around that decision. You pay the rate but living with the house, can feel more taxing and a burden if it’s not the right one. Make smart money decisions that you took your time on and will benefit you for the long run!

This is why I always talk to clients about goal setting and their plans for the next several years. If you need more information and help on this, I have free resources and additional blogs. You can also email me at agentofparadise@gmail.com and we can do some free goal setting and consultations together to see where you’re wanting to go, where you’re at, and getting you from here to there.