The Federal Reserve cut interest rates at the end of 2024, but home interest rates have only gone up since then.
Channel 2 consumer advisor Clark Howard says those crazy low rates aren’t coming back anytime soon, but there are some things you can do to squeeze the cost of that mortgage if you are trying to buy right now.
Noah Ruffin has been keeping a close eye on the housing market hoping interest rates on mortgages would fall.
It’s a conversation he has with friends who recently bought their own homes.
“I would tell them, ‘Hey, I don’t you know, interest rates are just too high.’ I don’t think I can actually afford a home,” Ruffin said.
Ruffin, like many aspiring first-time home buyers, is facing the harsh reality of a tough home market.
“You have to make a decision on whether or not you’re going to get it now or are you going to get in on the latter half of when home prices are already so inflated that it may not even make sense to,” Ruffin said.
People have been hoping against hope that mortgage rates would drop this year. But when the Federal Reserve cuts the interest rates it controls, it has virtually no effect on mortgage rates.
The only thing that matters is what inflation is like and inflation has stayed stubborn. That’s why mortgage rates are still high.
Ruffin reached out to Maya Sly, who is an Atlanta-based realtor and affordable housing advocate. She says if you’re playing the waiting game, hoping to see those low rates again, you may want to reconsider.
“I tell them, good luck. Good luck, because you’ll be waiting for a very long time. And then once you get there, you’re going to be paying above list price,” Sly said.
Sly said don’t be discouraged.
She said there are a lot of programs for first-time home buyers and government loans that can help lessen the financial burden.
Home builders who really want to sell the homes that they’ve got money tied up in are your best source for a low-cost mortgage. Many sellers of new homes are offering the best mortgage rates in the market.
“If you want to work with first-time homebuyers, you have to meet them where they are and they’re very payment, conscious, not price, it’s payment,” Sly said.
Regardless of what rate you have, when inflation gets under control, mortgage rates will drop, and you should be able to refinance your mortgage loan.
“Everyone wants you to get what they got. Or when I bought my house, I did this. It’s a different experience for everyone,” Sly said.
For Ruffin, he’s decided to move forward with buying his first home. He qualified for an FHA loan which comes with much more affordable down payments.
“If you are a young first-time homebuyer, don’t be discouraged by some of the obstacles that are in front of you. I will say, really, just try to be as savvy as possible and try to do your best to navigate this and figure it out,” Ruffin said.
One other way you might be able to get a good deal on a mortgage, believe it or not, some people still have assumable loans where you can get the interest rate they have when they sell you their home.
You may pay a little more because they know they got something you want, but it’s worth it.
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