@natale_realtors Is it better to have a lower interest rate or pay a lower price? With the real estate market changing fast, it’s important to discuss not only what’s happening, but who is really winning. Is the person who may have bought at a higher price in 2021, but has a 2.5% interest rate, doing better than the person who may buy a similar home 10% less in 2023, but with an interest rate of 6.5%. It really comes down to how long the new homeowner will be staying there in the home and if rates come back down. If rates don’t change, and both stay in the home for more than a small handful of years, the lower interest rate buyer will win 100/100 times. Their payment is exponentially lower than the buyer who may have paid less. If both go to sell in a year, the second buyer will have done better since the resale price most likely would not have dropped the same as the first buyer. If rates drop back down, and the second buyer can refinance, they will possibly be in a better position since their mortgage payment will be close or less since they purchased the property for a lower dollar amount. The important item in the debate is: you know what you know. The people with the low interest rate know they have their payment for the next thirty years. That’s a huge benefit when everything else gets so expensive due to inflation. The other buyer will be hoping for rates to come down or else they will be paying far more in interest back to the bank. If you need help navigating the current market in your neighborhood, don’t hesitate to contact us. We’re here to help. #realtor #realestate #mortgage #interestrates #buyingahouse ♬ original sound – Natale Realtors
Is it better to have a lower interest rate or pay a lower price?
With the real estate market changing fast, it’s important to discuss not only what’s happening, but who is really winning. Is the person who may have bought at a higher price in 2021, but has a 2.5% interest rate, doing better than the person who may buy a similar home 10% less in 2023, but with an interest rate of 6.5%. It really comes down to how long the new homeowner will be staying there in the home and if rates come back down.
If rates don’t change, and both stay in the home for more than a small handful of years, the lower interest rate buyer will win 100/100 times. Their payment is exponentially lower than the buyer who may have paid less. If both go to sell in a year, the second buyer will have done better since the resale price most likely would not have dropped the same as the first buyer.
If rates drop back down, and the second buyer can refinance, they will possibly be in a better position since their mortgage payment will be close or less since they purchased the property for a lower dollar amount.
The important item in the debate is: you know what you know. The people with the low interest rate know they have their payment for the next thirty years. That’s a huge benefit when everything else gets so expensive due to inflation. The other buyer will be hoping for rates to come down or else they will be paying far more in interest back to the bank.
If you need help navigating the current market in your neighborhood, don’t hesitate to contact us. We’re here to help.