In this article
If you’re a first time home buyer starting to shop around or an experienced one ready for something new, you probably have your eye on mortgage rates. Why shouldn’t you? The interest rate you get on a loan affects your monthly payments for years to come.
Unfortunately, rates have been up over the last few years and home buyers have had to accept it. The big question is, where are rates headed this year?
It’s easy to get fixated on rates and predicting the best time to buy a home. However, when it comes to your future and making a smart investment like real estate, there’s no better time than the present.
Keep reading to discover mortgage rate predictions for 2024 and how you can benefit from starting your home search now. We’ll also go over how tools like a mortgage calculator can help you plan for homeownership.
Will Mortgage Rates Drop in 2024?
Mortgage rates have been a roller coaster over the last several years. We saw a sharp drop in 2020 and 2021 as a result of the pandemic, then a huge spike in 2022. Rates continued to climb last year, but there’s hope for 2024.
The Federal Reserve says the country will see rate cuts soon. But other factors cause mortgage rates to fluctuate. Fannie Mae indicates that lenders may be offering average rates below 6% on 30-year fixed-rate mortgages by the end of the year. This is two percentage points lower than the highest rates of 2023.
A forecast like this is great news for potential home buyers waiting for the best time to apply for a mortgage loan. However, because so many economic factors affect rates, determining the perfect time to start shopping around is impossible.
5 Reasons You Shouldn’t Wait to Buy
Even if rates aren’t where you’d like them to be, there’s still a good chance buying now is better than waiting. You can get the ball rolling with an online mortgage calculator that will help you budget for homeownership.
Let’s look at the top reasons to make a move now.
Start Building Equity
Once you own a home, you start building up equity, regardless of high mortgage rates. Equity is the difference between your home’s value and the amount you owe on your loan. Every time you make a mortgage payment, your equity increases.
Building equity is important for many reasons. The more you build, the less debt you owe. Equity also allows you the freedom to make smart financial decisions down the road.
As your home appreciates and your equity improves, you can access finances through a home equity loan. This type of loan allows you to borrow against the equity you’ve built up and use the money for things like home renovations or debt consolidation. These loans often have attractive interest rates.
You can also leverage the equity in your home to fulfill other dreams like starting a business or investing in rental properties. Regardless of your long-term plans, building home equity is a great way to become financially stable and open up your options.
Achieving Stability
If you’re a first time home buyer, you’re probably no stranger to the headaches of renting. Sure, the lifestyle offers a certain amount of freedom, but it comes at a cost. High monthly rent, unfair lease contracts, and fickle landlords are commonplace.
When you buy a home, you leave this life behind. You don’t have to worry about the property owner increasing your rent or deciding to sell unexpectedly. Instead, you have the security and peace of mind of living in a home that’s all yours.
As a homeowner, you can make the upgrades you want and design the house based on your vision. This makes life much more comfortable and also helps improve the value of your investment.
You’ll also get a chance to choose a neighborhood you like and become a permanent part of the community. This is a smart decision if you want a stable environment to raise a family. Schools, parks, local businesses, and your surrounding neighbors will have a huge impact on your quality of life.
If this is what you’ve been dreaming of, use our mortgage calculator to get a better sense of a home’s affordability.
Long-Term Appreciation
Even if current interest rates are high, it’s important to think of buying a home as an investment. The value of real estate often surpasses its original price, and you can take measures to ensure this happens.
If you care for your home and make improvements over time, its value can only go up. This is a smart financial strategy that will pay off in the future. If you decide to sell your home years down the road, you’ll enjoy a handsome profit.
If you’re starting to look for homes on the market, there are other things you can do to increase the chance of long-term appreciation.
- Look for homes in areas that show increasing property values.
- Consider the quality of a house’s construction.
- Choose a home in a prime location with low crime rates and good schools.
- Work with a real estate agent who knows the local market.
Once you’re in a new home, it’s important to practice regular upkeep and maintenance. This helps you avoid damage and deterioration and ensures your home equity continues to trend upward.
An Unpredictable Housing Market
Like mortgage rates, the housing market fluctuates. The price of a great home in an ideal location could go up considerably by the end of the year.
While rates are expected to drop in 2024, many home price predictions have costs rising, making affordability an issue for home buyers. Waiting for attractive mortgage rates could end up costing you more. This means time is of the essence.
In recent years, low housing supply and high demand have contributed to rising home prices. Population growth adds to this demand and drives prices higher. And while things have leveled out a bit, there’s still a good chance costs will continue to go up over the next year.
Keep in mind that supply and demand aren’t the only things that affect the housing market. Economic factors like inflation and government policies impact it too, which means there’s no way to predict what will happen for sure.
Buying now while a home price is in your range is a smart move in today’s volatile market. Use an online mortgage calculator and start budgeting for homeownership today.
Tax Benefits
If rates aren’t exactly where you’d like them to be, you can take advantage of tax breaks that come with homeownership. This is an easy way to offset the cost of higher rates so you can purchase a home now without adding financial stress to your life.
Some common tax benefits include:
- Deductions for interest paid on your mortgage
- Deductions for interest paid on home equity loans
- Property tax deductions
- Credits for energy-efficient improvements like solar panels
- Deductions for mortgage insurance premiums
Speak with your accountant after you buy a home to find out which tax benefits you qualify for. Depending on your situation, you may be able to get a considerable amount back.
The Moreira Team Can Help You Navigate the Market
Don’t hold up your plans for the future while you wait for mortgage rates to improve. Let the professionals at The Moriera Team help you explore your options so you can make buying a home a reality.
Get started now by using our mortgage calculator to determine your affordability and create a budget.