Is the mortgage rate or the purchase price you pay for a home more important?

If you’ve been thinking about purchasing a home and you’ve been on the fence because you’re just not sure about the right time, the information that’s going to follow is for you…

Trying to time the market to identify a moment in time to pinpoint the right time to purchase a home is an incredibly challenging endeavor indeed. It’s equivalent to trying to locate a needle in a haystack. A better more pragmatic scenario would be to look at your cash, credit, and income and decide to purchase a home based on your household budget.

It boils down to your income, monthly expenses, and having a good foundational financial framework so you can make an informed decision. If all of those are in place how do you determine what’s more important purchase price or interest rate? As interest rates continue to move higher your competition goes away. Rising interest rates remove your competition. If you’re desiring to make an offer to purchase a home and your competition is little to nonexistent you have all the cards, and you hold all the power which allows you to negotiate a fair price for the home. After all, who wants to overpay for a home?

How do we know you will not overpay for the home? Its amazingly simple interest rates drive competition.  Put another way because interest rates are so high many are sitting on the sidelines waiting to see what the market does.  That’s good news for you as a smart and savvy homebuyer because it allows you to negotiate the purchase price of the home. Negotiating a purchase price reduction of $50kto 100k in this environment is not out of the question.

Say for whatever reason you’re concerned about the market and housing prices coming down, well in most markets’ rents are still in hot demand. On the flip side, we all know this environment with interest rates is not sustainable and long-term mortgage rates will come down. When interest rates come down borrowing power increases, when borrowing power increases, your competition will increase. More people will be after that same house at 6% or a 5% mortgage rate than they will at a 7% mortgage rate. That’s just a hard fact. So in other words your $600,000 home today at a 7% 30-year fixed rate mortgage very easily could be a $650,000 or a $675,000 home or more at a 6% mortgage rate assuming interest rates come down.  The notion housing prices are going to come down because of high-interest rates is highly unlikely as rents continue to soar, long-term fixed rates are poised to fall, and the supply of homes remains low.

Think of it like this if you purchase a home today you can always trade out the mortgage rate for something more favorable when rates come down in the future. The way you should look at it as an informed homebuyer should be something like this a 6.75% mortgage rate today for example could very easily be a 5.75% mortgage in 12 months and a 4.75% mortgage in 24 months. Using a $600k purchase price for the example above that’s going to translate to somewhere around $800 in lower mortgage payments to you when interest rates come down via subsequent refinancing opportunities. Waiting to see what happens in the future might make sense if there is any concern about your credit, your down payment, or your cash. If those elements are in place and you have the goal of buying real estate and holding onto it for a few years more than likely you will end up doing very well for yourself over the big picture.

 

If you’re thinking about purchasing a home or want to get a home-buying plan created for you and your family start today by getting a complementary mortgage rate quote.

 

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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