Is buying a house with high interest rates worth the investment?

Here’s when it may make sense to consider investing in real estate ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ [Better] [Better]( This week's mortgage rates [Rate chart] [Rate chart]( Source: US average mortgage rates from [FreddieMac]( --------------------------------------------------------------- Better Mortgage Interested in today's rates? [See Better Mortgage rates]( --------------------------------------------------------------- #FundFact 🏡 The Federal Reserve reports that Americans’ median ‘net housing value’, or the value of the house minus loans against it, has jumped 44% between 2019 and 2022.¹ Things to know Is buying a house with high interest rates worth the investment? Is buying a house with high interest rates worth the investment? If you’re a prospective homebuyer navigating the housing market and wondering if now is the right time for you to buy, you’re not alone. 84% of consumers believe it’s a bad time to buy a house.² While the market has definitely been challenging, there can still be value in deciding to invest in real estate while mortgage rates are high if you’re in a good financial place to do so. Buying a home now means that you can start building equity immediately. Your net worth increases as your home’s value rises, and home values have gone up significantly between 2019 and 2022. Like so many things in life, making the decision to buy a home should be determined on a case by case basis — there’s no right answer for everyone. What makes sense for you depends on your financial situation. You may be in a good position to consider buying a home in the near future if you feel confident about the following: - You have excellent credit. When you borrow money from a lender, you’ll be the first to be offered the lowest interest rate available if you’re able to demonstrate that you’re a low-risk borrower. According to the Federal Reserve Bank of New York, the median credit score for mortgage borrowers in the second quarter of 2023 was 769.³ - You’ve been putting money aside and have enough for a down payment. The more you can pay upfront, the less you’ll need to borrow — and the less you’ll pay in interest. In general, a larger down payment means a lower interest rate because lenders see a lower level of risk when you have more stake in the property. - You’re planning to stay in the home for a while. Buying a home means paying closing costs during your transaction, which can cost you thousands of dollars. To justify the one-time transaction costs, it’s smart to be reasonably certain that you don’t plan on moving anytime soon. If you feel like you have a strong financial profile, buying in today's high-cost housing environment can make a strong investment for many. Here’s why: - Real estate remains one of the solid and stable investments. The proof is in the pudding; over the past 81 years that we have been tracking home value data, there have only been seven years where the average home value dropped year over year.⁴ The net wealth of a homeowner is 40x that of a non-homeowner according to recent data, which shows how valuable a real estate investment can be. - There’s less competition. When mortgage rates do begin to decrease, it’ll be less costly to take out a mortgage and will open the door for new prospective homebuyers to enter the market. Home prices could also increase in response to mortgage rates decreasing, so while buying in this market is competitive because of low inventory, those who can afford it may benefit from buying now as opposed to waiting. - Rates have begun to cool. Beginning in March 2022, the Federal Reserve raised the benchmark rate 11 times consecutively, bringing the rate up to a total of 5.25% to help control inflation.⁵ However, during the September Federal Open Market Committee meeting and during the most recent meeting that was held October 31-November 1, the rate was held. For most of 2023, the average 30-year fixed rate bounced around between 6% and 7%, and in October, climbed up to nearly 8%. But in the past three weeks, the rate has begun to slip, with the average interest rate coming in at 7.22% as of November 30.⁶ - But that doesn’t mean it’s guaranteed that they won’t rise again. The final Federal Open Market Committee meeting of the year will be held from December 12-13. While the rate was held for the past two meetings, it doesn’t mean that will be the case this time around as well. By locking in a rate now, you can avoid a potentially higher rate in the future. - You don’t have to keep your rate forever. Interest rates and the market will always go through upward and downward cycles. As long as you meet the borrowing requirements, there’s always the opportunity to refinance your mortgage into a lower rate and potentially save on your monthly mortgage payment in the future. Making the decision between if you should keep renting or if you’re ready to step into the homebuying space is multi-layered. If you’re interested in doing some homework to see what makes sense from a financial standpoint, give our [Rent vs Buy Calculator]( a try. --------------------------------------------------------------- Better Mortgage Make strong offers with a One Day Verified Approval⁷ [Get started]( --------------------------------------------------------------- Press play Follow us on social to stay up to date with the latest mortgage tech, tips, and tools: Watch on [TikTok]( • [Instagram]( • [YouTube]( • [Facebook]( --------------------------------------------------------------- Better Mortgage Questions? Connect with a mortgage expert now [Get pre-approved today]( --------------------------------------------------------------- Quiz What percentage of single-family homes in the US use solar energy?⁸ - 3.7% - 5.7% - 10.7% - 15.7% [Better] [Better] [social]( [social]( [social]( [social]( ¹ Source: [Federalreserve.gov]( ² Source: [Fannie Mae]( ³ Source: [New York Fed]( ⁴ Source: [CBS News]( ⁵ Source: [CNBC]( ⁶ Source: [Freddie Mac]( ⁷ See [One Day Verified Approval Terms and Conditions]( ⁸ Source: [Consumer Affairs]( © 2023 Better Home & Finance Holding Company and/or its affiliates. Better is a family of companies. 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