Wait For Rates To Drop Or Buy Now?

This is the question on everyone’s mind right now: Do I buy now, or wait for rates to drop? The truth is, both have their pros and cons.

When rates are higher, the pro is that there are fewer buyers out there. That gives you more negotiating power. Sellers are more likely to offer credits—sometimes $10,000 to $20,000 on a $600,000 home. Those credits can be used for closing costs or even a temporary buydown, which means less cash out of your pocket up front. Combine that with softer prices and less competition, and you’ve got a better shot at getting the house you really love. The con, of course, is that your monthly payment is higher until you refinance, and you’ll pay more interest short term.

When rates drop, the pro is simple—your monthly payment goes down, and you qualify for a little more. For example, going from 7% to 6% on a $600,000 loan could save about $375 a month and increase your buying power by $25,000 to $80,000. Over the life of the loan, that’s thousands saved in interest. The con is that once rates fall, buyers flood back into the market. That means more bidding wars, fewer seller credits, and usually higher home prices—which also means more cash to close.

So here’s the trade-off:

• Buy now = more negotiating power, seller credits, less cash to close, but higher payments.

• Wait for rates to drop = lower payments and long-term interest savings, but more competition, higher prices, and likely more money needed upfront.

At the end of the day, it’s about what matters most to you—keeping upfront costs low and locking in your dream home now, or waiting for a smaller payment later with more competition.