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The Front Porch Blog

Education on all things homeownership

7 Reasons to Buy a Home Now

May 20, 2024 Homebuying, Featured

If you’ve been putting off buying a home recently, you aren’t alone.  

With high inflation and interest rates in 2023, many homebuyers put off their purchase until the new year. Some speculated that interest rates would decrease in 2024 – but so far that hasn’t been the case. That leaves many hopeful homebuyers facing a difficult question: Is it better to commit to today’s interest rates, or should they hold out even longer? 

Buying now, even when rates are high, may be a better bet. Here’s a look at 7 reasons why buying now may be a better decision than waiting for a better rate. 

1. You May Build Equity with Every Mortgage Payment 

Your equity in a home depends on how much of the principal balance you’ve paid off. Therefore, with each mortgage payment, you could be increasing your equity (or ownership). 

Why does building equity matter? Firstly, it’s an asset you can cash in if needed – when you sell your home or if you open a Home Equity Line of Credit. This means your payments, which otherwise may go to a landlord, build up over time until you fully own your home.  

Every month you delay buying a home, you’re missing out on an opportunity to build equity in your dream home.  

2. Homes Tend to Appreciate with Time 

As we can see from recent years, the real estate market has its fair share of price fluctuation. This is influenced by demand, availability of homes and other market factors. However, real estate tends to appreciate in value over time.  

That means a home's value in the future will tend to be more than it is today. You can think of your home as a long-term investment that you cash out when you sell your home. Unlike other investments, you'll be able to use it every day! 

3. Competition May Increase If Rates Drop 

In general, higher interest rates make people more hesitant to take on a mortgage. When rates drop, it’s likely that many homebuyers will enter the market. More buyers mean more competition for the perfect home and possibly even higher home prices as sellers take advantage of a thriving market. 

When you’re trying to find your dream home, competition can be overwhelming. When rates were at their record lows in 2020 and 2021, buyers struggled to put in an offer before watching a home get swept off the market. If you feel that now may be the right time to buy, it’s worth considering locking in a home before competition increases. 

4. The “Right Time to Buy” May Take Years – Or Never Come 

Both equity and appreciating home values are benefits that take time to build. There’s a cost to waiting to buy – and it increases the more you put off your purchase. 

The problem with waiting for the “right time to buy” is that there’s no guarantee when that time will come. We’ve already seen interest rates rise when predictions said they would drop. There’s no way we can accurately determine when rate will decrease or how much they’ll change. 

In fact, there may never be a “right time to buy”. If interest rates decrease, home prices may respond by increasing to match demand. We don’t know what the market will look like in the future – all we know is what it looks like today. 

5. You May Qualify for Incentives and Assistance Now 

Down Payment Assistance (DPA) and seller incentives could make buying a home more practical. Seller incentives may include funds to be used towards down payment or closing costs, special interest rates and other assistance to make homeownership more affordable for today’s buyers. 

The DPA programs available to you may be based on your first-time homebuyer status, income criteria, location and various other factors. Many DPA programs have a set amount of funds available. There may be more DPA options if you buy your home before competition rises. 

In general, your Loan Officer is the best source to talk to about your options. They have more localized knowledge of what you may qualify for. 

6. A Mortgage Provides a Stable Housing Payment 

Another advantage of a mortgage payment over rent is the stability of your payment over the years to come. When you rent from a landlord, you may be faced with a higher monthly price when renewing your lease. Then you’re faced with either paying the higher price for the same housing or paying to move somewhere else. 

With a fixed-rate mortgage, the amount you’ll pay for your principal and interest will be the same throughout the life of your loan. Any change in your monthly mortgage payment will be due to property taxes, insurance and/or HOA fees. 

7. Refinancing Can Help You Take Advantage of Future Rates 

Interest rates have a major impact on how much you’ll pay over the life of your loan. However, waiting for a better rate before you buy may not be necessary. As a homeowner, you may have the option to refinance your home in the future – an advantage many homeowners use if rates decrease. 

When refinancing, a homeowner receives new mortgage terms which may include interest rate and length of loan. You may be able to use refinancing to lower your monthly mortgage payments and pay less overall, all while staying in your dream home. 

It Depends on You 

The housing market is an important consideration as to when to buy a house, but personal factors play an even larger role. Where you are in life, your financial situation and your goals are all part of the equation when deciding when to buy.  

Here are a few questions to ask yourself to decide if you’re ready to buy: 

  • Do I plan to remain in the area for a while? Homeownership is often more appealing when looking for long-term housing. 

  • How important is a stable housing payment to me? If you’re renting, having a mortgage payment may provide more stability over the years. Your principal and interest payments – which make up the bulk of mortgage payments – will remain constant with a fixed-rate mortgage. 

  • Is building equity important to me? Mortgage payments may increase equity in your home every month. You can turn equity into liquid cash when you sell your home or by taking out a Home Equity Line of Credit (HELOC). 

Based on your answers, you may want to begin planning your home purchase. 

A mortgage calculator is a good place to start. Use this to estimate what your monthly payments could be based on home price, interest rate, down payment and other factors. You’ll get a better sense of what your down payment savings goal should be and what home prices you should consider during your search. 

We’re Here to Help You Make An Informed Decision 

Buying a home is one of the most important purchases you will ever make. As your guide on the path to homeownership, we aim to help you understand all your options and accomplish your dreams on a timeline that makes sense to you. 

After filling out our pre-qualification form online, you’ll be introduced to your dedicated Loan Officer. They’ll help you compare loan types, find assistance programs and discover the right path to make your dreams come true. 

Get pre-qualified today to get started! 

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