Think Today's Mortgage Rates Are Expensive? Here's What You Might Be Saving Each Month by Not Signing a Loan at 7%

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  • While today's mortgage rates aren't a bargain, they're lower than they were at the end of 2022.
  • If you can afford to buy a home based on today's rates, there's always the possibility of refinancing your mortgage once rates drop.

There's a reason so many people are continuing to wait to buy a home. Not only are property values still elevated on a national scale, but mortgage rates are still pretty high.

Or are they? It's true that if you sign a mortgage today, you'll generally be looking at an interest rate that's higher than what you would've paid in 2021 or early 2022. But today's mortgage rates aren't as high as they were back in late 2022. And that's something worth considering.

You might enjoy some savings by signing a mortgage today

In late 2022, there was a point when mortgage rates reached and even surpassed the 7% mark. These days, however, rates are hovering in the low- to mid-6% range. (And to be clear, when we talk about mortgage rates in this context, we're referring to the 30-year mortgage. You might snag a lower rate on a 15-year loan because you're borrowing for a shorter period of time.)

A recent analysis from Lawrence Yun, chief economist for the National Association of Realtors, found that signing a mortgage today compared to last year's 7% peak could save the typical borrower $140 a month on a $300,000 mortgage. That's a big difference -- one that might help you feel better about signing a mortgage now.

Should you put off homeownership until mortgage rates come down?

Many buyers have paused their home searches and are hoping to hold off on making a purchase until mortgage rates come down. But it may be time to accept the reality that rates aren't going to plunge anytime soon.

Is it possible that we'll see mortgage rates in the upper 5% range this year? Yes. But we're most probably not going to see mortgage rates dip back down into the 3% or 4% range anytime soon. And that's something buyers need to accept and come to terms with.

If you're delaying a home purchase until mortgage rates get back down to 3% or 4%, you might end up waiting a really long time. So rather than do that, crunch the numbers. If you can afford to purchase a home today with a mortgage in the 6% range, and you're eager to start reaping the benefits of homeownership, go for it.

In time, mortgage rates have the potential to drop. We may not see a notable dip for a good number of years, but if you can afford a home based on today's rates, you can always sign a more expensive mortgage and then look to refinance your loan to a lower interest rate once the opportunity presents itself.

Of course, that makes a few assumptions -- that your home's value doesn't decline substantially and that your credit score remains in good shape. Refinancing could become difficult if the value of your home plunges and your credit score takes a dive. But otherwise, it's something to keep at the back of your mind if you're not so happy with today's mortgage rates but wish to become a homeowner sooner rather than later.

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