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Is Now A Good Time to Build a Home or Should I Wait for Mortgage Interest Rates to Drop?

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People often ask us if they should build a home now or if they should wait for mortgage interest rates to drop. The decision to buy or build a home is a highly individualized matter—what works for you might not work for your neighbor. And when it comes to mortgage interest rates, they play a relatively minor role in the overall home affordability equation. We hope this blog helps educate you on the various factors to consider surrounding mortgage interest rates when getting ready to build your dream home.

Historically, Mortgage Interest Rates Are Still Really Low.

Current rate shoppers shouldn’t get too fixated on the historic low rates of 2020 when considering their financing today. Interest rates in America reached record lows in December 2020, with the lowest rate being 2.68 percent. Throughout 2021, the average rate was roughly 3.11 percent. We can’t stress enough that these were new historical lows in a 30-year time period. Looking at today’s current rates, in relation to the previous ten years, this is still incredibly low.

Waiting for Interest Rates to Drop? There’s No Guarantee That They Will.

Building a home is one of the biggest decisions you can make and waiting too long to begin the process could be devastating. Especially if you miss out on the exact lot you want with competitive pricing. So what should you do? Should you wait on lower interest rates?

The answer isn’t as simple as it used to be, because there are many factors that influence whether or not it’s a good time to finance. But one thing is for sure: if you’re waiting for interest rates to drop, there’s no guarantee that they will. In fact, experts say rates are only expected to get higher over the next 12 months.

In another recent article about interest rates, experts advised against worrying too much about whether rates would fall or not. The overall consensus for would-be homebuyers: Don’t feel like you’ll be locked into today’s rates forever if you do decide to finance now. If rates do fall over the coming years, you may get an opportunity to refinance and take advantage of a much lower rate.

Let Affordability Be Your Biggest Guiding Factor in Building a Home.

The biggest question homeowners should consider is whether they can afford a home now, regardless of rates. We suggest seeing how much home you can truly afford by running the numbers through an online mortgage calculator. Trulia’s mortgage calculator offers an easy way to factor in essentials like monthly and total loan costs plus interest charges. Another one we like is this online mortgage calculator from Dave Ramsey, which gives you an idea of your monthly payment by adjusting the interest rate, down payment, home price, and more.

If your finances are in good shape and you have a stable job, then buying now may be your best bet, especially if you’ve found your dream home at a great price. But if you’re still saving up for your down payment or struggling with debt, then it might make sense to wait until early next year before thinking about that home.

If You’re Serious About That Lot, You Shouldn’t Wait Too Long.

If you’ve seen land you absolutely love and can afford it, this is as good of a time as any to make the move to build your custom home. You cannot time the market and should always look at your home-building decisions as a long-term investment strategy. Always waiting for that lower rate is a bit like gambling—it might not materialize.

Also, building a custom home takes time to plan, and finding the right land around the DFW area is priceless. Where you build is just as important as what you build. If you’re waiting for interest rates to fall, it might actually backfire on you. The demand for land in Texas is always increasing which means you chance missing out on the property you really wanted. If you wait, the cost (and interest rate) may increase dramatically. Waiting too long could cost you the rate—and property—you’ve always wanted.

Is Now A Good Time to Build a Home or Should I Wait for Mortgage Interest Rates to Drop? Couto Homes

Couto Homes—Raising the Standard

We understand building a custom home is a huge investment and that rising interest rates cause many people concerns. Our experts would love to sit down with you to discuss your custom home-building options and calm any fears you might have about the process. When you build with us, you’ll find the only thing we raise is the standard of doing business.

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