August 21, 2023
In August of 2023, many news outlets reported a competitive American housing market with high demand and low inventory still influencing the market.
Low inventory today could be partly the result of many house hunters purchasing homes while home loan interest rates were low and hanging onto the property for the long haul.
There are other factors, but for most home buyers, a central issue is today’s high interest rates and how much that will affect the overall cost of the loan.
What do you need to know about home buying in today’s housing market?
Refinancing When Rates Fall
Do you need to buy now? If you cannot wait to purchase property and aren’t inclined to sell or get a cash out refinance option, there are other ways to reduce your mortgage rate later.
When rates are lower, consider either an FHA streamline refinance or an FHA simple refinance. In the current mortgage rate environment, the FHA streamline refinance option isn’t good for those who purchased before home loan interest rates reached higher levels.
As home loan rates fall back to lower levels, the FHA streamline refi option becomes more realistic. It’s a question of waiting for those rates to get lower.
Housing Markets Have Cycles
Prices may be higher today. Interest rates may be higher today. But they won’t stay that way forever.
Over time, the market forces responsible for today’s higher costs will change. And as those changes start happening, you may also see your property values increase.
The money you pay today in interest may be offset later if you sell in a recovering housing market with rising property values.
But there is no way to measure how long that recovery might take to show up. Some experts in 2022 thought the third quarter of 2023 would be when conditions started to improve. But those predictions at press time have not come true.
Homes Bought Today Start Building Equity Over Time
Your down payment is the first step toward building equity. What is equity? The cash value of your home at the given moment is based on how much you still owe and how much you have paid.
Those aren’t the only things that affect the equity calculation. Competition and the current state of property values in your area may also affect how much your home is currently worth. Having more equity in your home is a good thing.
If you need to buy today, you can take comfort in the fact that you are watching your investment grow.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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