Do You Really Need To Wait For Rates To Drop To Buy?

Many homebuyers are hoping for a significant drop in mortgage rates, but experts predict rates will only decline slightly, perhaps not quite as much as some may have expected. Although rates are projected to decrease, they are likely to stabilize around 6.5% by the end of the year.

Recent forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo show the following averages for projections for 2025 broken down by quarter:

• Q1: 6.96%

• Q2: 6.86%

• Q3: 6.68%

• Q4: 6.53%

If you're waiting for significantly lower rates, you may need to reconsider your plans. Life changes, like a new job or a growing family, might mean you can't afford to wait. Fortunately, there are some other ways to make homebuying more affordable even if rates don’t drop drastically. Here are three creative financing options that you could consider:

Mortgage Buydowns: You can pay an upfront fee to lower your mortgage rate temporarily. This is helpful for buyers seeking lower monthly payments, especially first-time buyers, as 27% of agents report that many are asking sellers for buydowns.

Adjustable-Rate Mortgages (ARMs): ARMs typically offer lower rates at the start, making them a good choice if you expect rates to drop further or plan to refinance. Unlike the risky ARMs of the mid-2000s, today’s ARMs are more secure, as lenders check borrowers’ ability to pay higher rates in the future.

Assumable Mortgages: With an assumable mortgage, you can take over the seller’s existing loan, including their lower mortgage rate. Over 11 million homes qualify for this option, making it worth exploring if you want a better rate.

In the end waiting for mortgage rates to drop drastically may not be the best approach. Instead, consider alternatives like buydowns, ARMs, or assumable mortgages to make buying a home more affordable now. Talk to your preferred lender to find out what works best for you or contact me to begin the discussion.