Waiting for 5%? The Interest Rate Isn’t the Whole Story

If you’ve been thinking about buying a home but keep telling yourself, “I’m going to wait until interest rates come back down,” you’re definitely not the only one.

Rates have been a huge part of the conversation lately, and I completely understand why buyers are discouraged when they hear numbers around 7%. But here’s the part I think buyers need to hear:

The interest rate is only one piece of the deal.

No one can predict exactly what rates are going to do next. They could come down, stay where they are, or move higher. And even if they eventually return closer to 5%, the market you’re buying in at that point may look completely different.

Think about it this way.

Would you rather buy around 7% when there may be less competition and potentially more room to negotiate?

Or wait for rates to come down and possibly find yourself competing with several other buyers for the same house?

Neither option is automatically right or wrong. It depends on your finances, your lifestyle, the home, and what the market looks like when you’re ready.

The Purchase Price Isn’t the Only Thing We Can Negotiate

This is one of the biggest things I want buyers to understand.

When people think about negotiating on a house, they usually think:

“Let’s offer $10,000 less.”

But sometimes, simply reducing the purchase price doesn’t change the monthly payment as much as you might expect.

Depending on the property, seller, loan program, and lender guidelines, we may instead be able to negotiate seller concessions that can help with eligible closing costs, prepaid expenses, or even an interest-rate buydown.

For example, instead of asking a seller to reduce the price by $10,000, it may make more sense to ask whether they’re willing to contribute toward allowable buyer costs.

That money could potentially make a bigger difference in how much cash you need at closing or what your monthly payment looks like.

That’s why I don’t want my buyers looking at only the list price or only the interest rate.

We need to look at the whole deal.

Buying Just Because You Can Isn’t the Goal

I’ll also never tell someone they need to buy a house simply because they qualify for one.

Being approved for a certain amount and being comfortable spending that amount are two completely different things.

If you’re renting for $1,500 a month, you’re comfortable, you’re saving money, and buying right now would stretch your budget too far, then continuing to rent may be the better decision for you right now.

And that’s okay.

My goal as an agent isn’t just to get someone to the closing table.

I want my buyers to find a home they genuinely love while still being able to live their life after they make the mortgage payment.

I want you to be able to go out to dinner, take your family on vacation, handle an unexpected expense, and sleep at night knowing your housing payment fits comfortably into your budget.

Don’t Count Yourself Out Before You Run the Numbers

On the other hand, if you genuinely want to buy a home and the only thing stopping you is hearing that rates are around 7%, don’t automatically assume homeownership is off the table.

Talk to a lender.

Look at actual numbers based on your financial situation.

Figure out what monthly payment feels comfortable to you — not simply the maximum amount you could technically qualify for.

Then, if we find the right home, we can look at the entire transaction and determine where there may be room to negotiate.

Maybe that means negotiating the price.

Maybe it means asking for seller concessions.

Maybe it means using eligible concessions toward a rate buydown.

Or maybe the numbers simply don’t make sense yet, and we decide to wait.

All of those outcomes are okay.

There’s More to Buying a Home Than the Interest Rate

Real estate isn’t one-size-fits-all.

The lowest interest rate doesn’t automatically mean the easiest market to buy in, and a higher interest rate doesn’t automatically mean you can’t afford to purchase a home.

There are a lot of moving pieces:

• The home.
• The price.
• The competition.
• Your down payment.
• Your closing costs.
• Your loan program.
• The seller’s motivation.
• And what we’re able to negotiate.

So if you’ve been thinking about buying a home in Rockingham County, Harrisonburg, or the Shenandoah Valley, but today’s interest rates have made you completely count yourself out, I’d encourage you to at least find out what your options really are.

You may decide that waiting is best.

Or you may realize there’s a path forward that you hadn’t considered.

Either way, my goal is the same:

Help you understand your options, find a home you love, and make sure the numbers comfortably fit your life.

Kaylyn Beach-Gehman, REALTOR®
Realty ONE Group Old Towne
1645 Reservoir Street, Suite 151
Harrisonburg, VA 22801
Office: (540) 208-0041