If mortgage rates are the main reason you’ve put your home search on pause, you’re certainly not alone.

It’s easy to think,“Maybe I’ll just wait until rates come down.”

But the more important question may be: What if they don’t come down as much, or as quickly, as you’re hoping?

Mortgage rates have continued to fluctuate, and predicting exactly where they will go next is difficult. As of August 13, Freddie Mac’s weekly survey put the national average 30-year fixed mortgage rate at 6.67%. That is only slightly below the 6.69% average recorded one week earlier. [freddiemac…cs-web.com], [finance.yahoo.com]

For homebuyers, that doesn’t mean you should rush into purchasing a house. It means it may be worth considering more than just the headline interest rate when deciding whether now is the right time to make a move.

1. Waiting for a Big Rate Drop Comes With Uncertainty

Trying to perfectly time mortgage rates is difficult.

Rates are influenced by several economic and financial factors, and forecasts can change as new information becomes available. Fannie Mae specifically cautions that its economic and housing forecasts are based on assumptions, are subject to change, and should not be treated as guarantees. [fanniemae.com]

So rather than building your entire homebuying plan around a specific future rate, consider the bigger picture:

  • What monthly housing payment are you comfortable with?
  • How much do you have available for a down payment and closing costs?
  • How long do you expect to own the home?
  • What homes fit your budget today?
  • Would waiting improve your financial position?
  • What financing options could make buying more comfortable?

Those answers may be more useful than trying to predict exactly what rates will do several months from now.

2. Small Changes in Rates Can Help, but Your Whole Financial Picture Matters

Mortgage rates can and do move.

For example, Freddie Mac’s 30-year fixed national average moved from 6.69% on August 6 to 6.67% on August 13. [freddiemac.com], [finance.yahoo.com]

Actual rates available to an individual borrower can be different from national averages. Your loan program, credit profile, down payment, property type, points, loan term and other factors can affect your pricing.

That’s why shopping for a home based solely on a national mortgage-rate headline may not give you the clearest picture of your buying power.

Instead, have a lender run the numbers based on your actual situation.

3. Your Options May Be Broader Than You Think

A 30-year fixed-rate mortgage is only one way to finance a home.

Depending on your qualifications, goals and property, there may be other options worth discussing with your lender.

Explore new construction

If new construction is available in your area, ask about builder incentives.

Depending on the builder and development, incentives could potentially include contributions toward closing costs, upgrades or financing-related concessions. Availability and terms vary, so compare the entire transaction rather than focusing only on the advertised incentive.

Ask whether an ARM makes sense

An adjustable-rate mortgage may offer different initial pricing than a fixed-rate loan, but the rate can change later according to the terms of the loan.

For a buyer who understands the adjustment structure and has the right financial situation and time horizon, an ARM may be worth discussing. It isn’t appropriate for everyone.

Learn about mortgage rate buydowns

A buydown can reduce the borrower’s interest rate permanently or temporarily, depending on how it is structured.

The cost and long-term benefit should be carefully evaluated. A lender can show you the numbers so you can compare a buydown with other uses for those funds.

Ask about seller concessions

Depending on your loan program and transaction, seller-paid concessions may be available to help cover eligible costs.

That could make a meaningful difference in the cash you need at closing. Limits and eligible costs vary by loan program.

Ask whether an assumable loan is available

Certain government-backed mortgages may be assumable under specific requirements.

When available, assumption can allow a qualified buyer to take over certain terms of the seller’s existing mortgage. But assumptions can involve qualification requirements, servicer approval, equity considerations and additional cash or secondary financing, so they should be evaluated carefully.

The Bigger Question: Does Buying Make Sense for You?

There isn’t one mortgage rate at which everyone should suddenly buy a house.

The right time to buy is much more personal.

If you’re financially prepared, find a home you love, expect to own it long enough for the purchase to make sense, and can comfortably handle the total monthly payment, today’s market may still provide an opportunity.

If the numbers don’t work, waiting can also be the right decision.

The goal isn’t to time the market perfectly. It’s to understand your options well enough to make a confident decision.

For informational purposes only. This is not a commitment to lend or a guarantee of any specific interest rate, loan program or qualification. Mortgage rates and loan terms are subject to change and vary based on borrower qualifications, loan program, property and market conditions. Not all borrowers will qualify. Consult a qualified mortgage professional regarding your individual circumstances.

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