The housing market continues to be one of the strongest parts of the economy amid the COVID-19 pandemic. Housing supply is at historic lows. New building permits and housing starts are increasing. Home prices are increasing. If you’re in the market to buy a house, you may feel pressure to find and purchase a house or you may feel like you have missed your opportunity. You still have time, but your time may be getting shorter to take advantage of historically low interest rates.
What to do?
Right now, you can still buy a home at a similar total cost as you could have over the summer. Back in July, I wrote about housing, when the average 30-year mortgage interest rate was 3.20%. Since then the 30-year mortgage rate has dropped to 2.92%. This drop in mortgage rates allows you to buy a slightly more expensive home but with the same mortgage payment.
| Starting Date | Interest Rate | Loan Amount | Monthly Payment | Total Cost |
| July 29,2020 | 3.20% | $300,000 | $1297.40 | $467,064 |
| July 29, 2020 | 3.20% | $291,000 | $1258.48 | $453,053 |
| December 2, 2020 | 2.92% | $300,000 | $1258.35 | $453,006 |
| December 2, 2020 | 2.92% | $311,000 | $1297.81 | $467,211 |
As you can see, buying a house with a mortgage of $300,000 now with a 2.92% interest rate has the same mortgage payment as a mortgage of $291,000 in July with an interest rate of 3.20%. Similarly, you could start with a $311,000 mortgage now and have the same mortgage payment as a $300,000 mortgage from the summer.
Wrapping Up
Even though you may feel like you’ve missed your opportunity to look for a new home, with interest rates lower than they were this summer, you still have an opportunity to buy a house if you are in the market for one. You also have seasonality in your favor if you’re looking for a home now. The late fall and winter months tend to be slower for selling homes which usually helps make it more of a ‘buyers market’, but houses are still selling at a quick pace. Also, at 2.92%, mortgage rates may be close to their bottom. While mortgage rates may drop some more, it may be a good time to consider locking a mortgage at current interest rates.
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