Waiting for Lower Interest Rates Could Cost You Thousands

If you are waiting for mortgage interest rates to drop before buying a home on the Jersey Shore, you might end up paying significantly more in the long run.

Here is why: while interest rates go up and down, home prices almost always keep rising.

Look at the trends

Over the last five years, home values in Monmouth County have climbed steadily:

• 2020: +11.7%

• 2021: +14.9%

• 2022: +11.2%

• 2023: +8.3%

• 2024: +6.2%

To put that in perspective, a home that sold for $700,000 in 2020 is worth approximately $1.15 million today.

The cost of waiting vs. buying now

Let’s compare two choices on buying a $700,000 home today:

Option A: Buy Today at 7.75% and Refinance Later

1. You purchase the home today for $700,000 at today’s rate (7.75%).

2. In one year, interest rates drop to 6%. You refinance your mortgage to lock in that lower rate.

3. Because you spent a year paying down your loan balance, your refinanced mortgage is now $624,471.

4. Your new monthly payment: $6,090

Option B: Wait One Year to Buy at 6%

1. You wait a year for rates to drop to 6%.

2. Even if home prices grow by a modest 3.5% (well below historical averages), that $700,000 home now costs $724,500.

3. Financing a higher price tag means you start with a larger loan balance ($652,050).

4. Your monthly payment: $6,339

The difference: Waiting for a lower interest rate costs you $249 more every single month because you had to buy the home at a higher price.

Key takeaway.

Secure the property price today, start building home equity right away, and refinance your loan when interest rates drop.

"Time in the market" is a much stronger strategy than trying to "time the market."

Ready to start your home search on the Shore? Reach out today!