Let’s be real —everyone hopes mortgage rates will take a nosedive before buying a home. But will that happen? Experts say rates should dip a bit, but not as much as most folks are hoping for.
So, How Much Will Rates Drop?
Not too long ago, predictions had mortgage rates potentially slipping below 6% by year-end. Fast forward to now, and things have shifted. Recent forecasts from Fannie Mae, the Mortgage Bankers Association (MBA), and Wells Fargo project rates will hover in the 6.5% to 7% range.
What does that mean for you? If you’ve been holding off on buying in hopes of snagging a much lower rate, you might be waiting longer than you’d like. And let’s face it—if life pushes you to move (new job, growing family, tying the knot, etc.), waiting might not be an option.
Creative Ways to Afford a Home (Even with Higher Rates)
Good news: Even if rates aren’t dropping as fast as we’d like, there are still smart ways to make buying a home more affordable. Here are three creative financing options to chat about with a trusted lender:
1. Mortgage Buydowns – Pay Now, Save Monthly
A mortgage buydown lets you pay a fee upfront to snag a lower interest rate for a certain period. Translation: lower monthly payments when you need them most. This is especially popular with first-time buyers—27% of agents say buyers are asking sellers to help with buydowns. It’s a win-win if you’re looking to ease into those mortgage payments.
2. Adjustable-Rate Mortgages (ARMs) – Not as Scary as You Think
ARMs can get a bad rap, but they’ve come a long way since the 2008 housing crash. These mortgages start with a lower rate compared to a 30-year fixed loan, making them appealing if you plan to refinance later or move within a few years.
Here’s what’s changed:
- Pre-2008, some lenders handed out ARMs without verifying if buyers could handle future payments (remember “no-doc” loans?).
- Today’s ARMs are safer—lenders now confirm your ability to handle those payments even when the rate adjusts.
As Lance Lambert, Co-Founder of ResiClub, says:
“... ARM products today are different from many of the products issued in the mid-2000s. Before 2008, lenders often approved ARMs based on borrowers ability to pay the initial lower interest rates. And sometimes they didn’t even check that (remember Ninja loans). Today, adjustable-rate borrowers qualify based on their ability to cover a higher monthly payment, not just the initial lower payment.”
Bottom line? If you plan smartly, an ARM could save you money upfront.
3. Assumable Mortgages – Inherit a Lower Rate
Imagine being able to take over the seller’s existing mortgage—and their lower rate. That’s the beauty of an assumable mortgage. With over 11 million homes qualifying, this is an option worth exploring, especially in a higher-rate market. If you find a seller with a 3% or 4% rate, that’s a game changer.
Bottom Line
Waiting for rates to plummet might leave you sitting on the sidelines longer than you’d like. Instead, explore options like mortgage buydowns, ARMs, or assumable mortgages to make buying now more affordable.
Wondering which option fits your situation? Let’s talk it through! Reach out today, and I’ll help you find the best path to your next home. Call me at 816-328-2887 or fill out the quick form below.
Hi! I'm Merla Turner, owner of Great Missouri Homes and a local Kansas City area Realtor. Thank you for reading this article. If you have any questions, suggestions, or ideas, call me at 816-328-2887 or fill out the contact form below, I am here for you. And remember - when it's your turn to buy or sell real estate, turn to Merla Turner!
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