Is Home Price or Affordable Financing More Important When Buying a House?

If you have been paying attention to the housing market, you may have heard that when mortgage rates increase, housing prices decrease. Is there truth behind this statement? More than that, how does this impact your upcoming plans to buy a new house?

Housing prices have been rising at a breakneck pace in recent years in markets across the country. It may seem as though this is tied directly to the incredibly low interest rates. The Fed has been hinting at raising interest rates for a while. If this is the case, you may be anticipating a drop in housing prices as soon as interest rates start their ascent. However, other factors drive housing prices as well. For example, available inventory and hyperlocal factors, such as new developments and employment rates, impact housing prices.

The reality is that housing prices and interest rates are correlated, but they do not always move in opposing directions. Each market is unique, so it is important to assess all factors in your market. Keep in mind, however, that timing the market so that you purchase at the most ideal time is challenging because so many moving forces impact market conditions.

As you prepare to make your next home purchase, you may be wondering if you should sit on the sidelines with the hope that housing prices will drop slightly or if you should act now to lock in a low interest rate. Everything from your credit scores and down payment amount to your debt-to-income ratio and other factors will drive the cost of financing available to you. Because of this and because of unique nuances in different markets, there is no hard and fast rule that applies all parties.

More than that, home prices and interest rates could rise together over the course of the next few years. If this happens, you may be priced out of the market altogether. With this in mind, it is important to make a buying decision based on the current market situation rather than playing a what-if game with future market conditions. At MortgageDepot, we are available to answer your questions about today’s loan programs, so contact us today to explore your options.

Contact one of our loan consultants to learn more.

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