Buying a Home in Today’s Mortgage Environment

December 4, 2023

Purchasing a home is a significant financial decision that requires careful consideration and planning. In today’s real estate market, the dream of owning a home may seem out of reach for many. With skyrocketing property prices and mortgage rates less favorable than they used to be only a couple years ago, it’s easy to become discouraged.

However, the truth is that purchasing a home in today’s mortgage environment is not only possible but can also be a wise financial move. The “American Dream” is still achievable.

In this article, we will explore how you can still achieve your homeownership dreams and why securing a home now, despite high prices, is an investment worth making.

Tips For Purchasing A Home In Today’s Market

1. Prioritize Purchase Price and Monthly Payment

One of the most common debates among potential homebuyers revolves around whether to prioritize the mortgage rate or the home purchase price. While mortgage rates are undoubtedly important, you should put your focus on the home purchase price.

It’s no secret that mortgage rates have steadily increased over the past year. And while the increased rates may seem shocking, higher rates do not have to prevent you from achieving your homeownership goals. Focus on the monthly payment to ensure you can afford it and evaluate the purchase price of the home. The purchase price can’t be changed once settled. Rates do change, and the opportunity to refinance may likely arise when rates decrease, which would help reduce your monthly payment. Make sure the house is worth the purchase price and that you can afford the payments, plus other fixed costs and discretionary expenses.

2. The Potential for Refinancing

When you buy a home, you’re not stuck with your initial mortgage rate for the entire loan term. The ability to refinance allows homeowners to take advantage of lower interest rates when they become available. So, even if you secure a mortgage at a slightly higher rate today, you can potentially refinance in the future to reduce your monthly payments. This can be especially advantageous if interest rates drop significantly, potentially saving you a substantial amount of money.

3. Home Appreciation and Equity

The value of real estate generally tends to appreciate over time. This means that, despite purchasing a home in a high-price market, your property’s value is likely to increase over the years. This growth in home equity can offset the initial costs associated with buying in a competitive market. Furthermore, the equity in your home can serve as an asset that can be leveraged for future financial needs, such as home improvements or other investments.

4. A Hedge Against Rising Rents

In most markets, rent prices are rising at an alarming rate. Owning a home provides you with financial stability and a hedge against ever-increasing rental costs. By locking in a mortgage rate now, you can secure your housing costs for the long term, whereas renters face the uncertainty of rising rents with no end in sight.

5. Tax Benefits of Homeownership

Owning a home comes with several tax advantages, including the ability to deduct mortgage interest, property taxes, and other expenses. These deductions can help lower your overall tax liability, potentially putting more money back in your pocket.*

In today’s mortgage environment, where property prices are high and interest rates have increased, it’s essential to recognize that buying a home is not only possible but also still a financially sound decision. The potential for future refinancing, the equity-building potential of homeownership, and the tax benefits all makes buying a home a wise investment. These factors combine to create a unique opportunity for individuals and families to secure their financial future through homeownership. Don’t let the current market conditions deter you from taking this important step toward your homeownership dreams.

Contact us to learn more about how Eastern Savings Bank can help make this a reality and to start a discussion about your home financing needs.

• Consult your tax advisor for more information and applicability based on your individual circumstances.