Yes, Rates Are Rising – But Buying a House Is Still a Good Idea
You’ve probably heard by now that interest rates are increasing, and it was just announced that
another half-point rate increase would likely happen in May. At the time of writing, mortgage
rates are 5.25% for a 30-year fixed-rate mortgage which is the highest they’ve been in over five
years. With the increase in mortgage rates and the skyrocketing home values, you’d be crazy to
buy a house in today’s market, right? Not exactly. Let’s look at why buying a house in Colorado
is still a good idea.
Prices Are Still Climbing
We have bad news if you’ve been waiting around for home prices to drop. It will cost you more
to buy a house today than it would have a year ago. Home values in Colorado have increased by
about 23% in the last year, and it looks like Colorado home values will continue to rise through
the end of the year. Waiting longer to buy will end up costing even more.
We understand that you may be worried that this increase in Colorado home values is
unsustainable, and we are headed toward a crash. There are no signs that a crash is coming, but
the real estate market is cyclical, meaning values go up and down. This means that even if you
are afraid home values will decrease after you buy a home, they will go back up eventually.
Look at the people who bought homes in 2006 at the top of the market right before the bubble
burst. Those who stayed put through it all now have home values well above what they were
when they purchased it.
What If Rates Drop?
Don’t let rising mortgage rates scare you off from buying a home and building wealth through
equity. Even if you bought a house today with a 5.25% interest rate, you could always refinance
if rates dropped to, say, 3.75% in the future. Refinancing is a fairly simple process that just
thousands of homeowners do each year to save themselves hundreds of dollars each month.
Buying Is Cheaper and Less Stressful Than Renting
Home values have increased, but so have rental rates. Rental homes are hard to come by, and we
have heard multiple stories from renters who have been told that their rent will increase by
hundreds of dollars once their lease is up. Unless you can negotiate a long-term lease with your
landlord where you agree to pay the same rate year after year, this will probably happen to you
too. If you can’t afford the rate increase, you would have to find a new place to rent, pack up,
and move. That’s expensive too!
When you’re a homeowner, your mortgage payment will be the same for as long as the mortgage
terms indicate. Ten years from now, when Colorado home values are even higher, you’ll still be
paying the same amount on housing as you are today, plus you’ll be building equity.
Want To Get Started?
The first step toward homeownership is mortgage pre-approval. Contact us to start your
mortgage application. We would love to get the process started with you.