Reasons to Buy a Home in Miami Before Rates Fall

Reasons to Buy a Home in Miami Before Rates FallMany hopeful homebuyers in Miami have heard the forecasted news of mortgage rates dropping this year. Some homebuyers are holding off on a home purchase to secure a lower interest rate, but this might not be the best buying strategy. 

Waiting for mortgage rates to hit a forecasted six percent or until they get into the five percent range could end up costing a homebuyer more than they expect. It could have the potential to make purchasing a home more difficult as well. Waiting for rates to fall may seem like a logical step to save money, but it isn't always true. 

Why Waiting for Rates to Fall Isn't the Best Strategy

The Price of a Home

The biggest reason a Miami buyer would wait to purchase a home is to save some money on their home purchase. Let's take a look at how much the price of a home would be impacted by a slight decrease in mortgage interest rates. 

Using the national average price of a home which is $420,000 (there are many Miami homes priced well above this but it is a good example number to utilize) if you were to purchase a home with a standard 20% down payment and secure a loan at 6% interest instead of 7% you would save around $221 a month on your mortgage bill. Securing a 5% mortgage rate would save over $430 a month. 

These are fairly significant savings. But there is no guarantee that the $420,000 home is still going to be priced at $420,000 when rates hit those percentage marks. There is also no guarantee that mortgage rates will come down to those levels any time soon. So as house prices continue to increase you will be waiting for mortgage rates to decrease which is never something that can be 100% predicted. 

At the beginning of 2023, some experts predicted that mortgage rates would already be in the 5% range at this time in 2024. They were forecasted at the beginning of last year to drop significantly and they did drop but they increased again to levels no one expected in November.

The Competition

If you remember the historically low-interest rates during the pandemic, you will probably also remember the competition that it caused with a flood of interested homebuyers trying to purchase their dream home. 

When interest rates dip it will bring more buyers to the market. This will increase the competition. Some buyers have been waiting for a couple of years for interest rates to drop since they began increasing. There are several buyers in Miami waiting to purchase a home until the ideal mortgage rate comes back around. Many homeowners have thought about moving but have held off because they have lower mortgage rates on their current home than they would be able to secure if they purchased a new home and took out a new mortgage loan. While this could increase inventory slightly it may not be enough to keep competition among buyers from making purchasing a home increasingly difficult. 

If you are considering the purchase of a Miami home, it is best to find what your affordable home budget is and to search sooner rather than later. A lower mortgage interest rate can bring a lower monthly payment, but home values and prices are expected to increase as the seller's market continues. 

For more information on homes and real estate in Miami contact me any time. I am here to help you find the ideal Miami property right now, one you can afford and will love. 

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