If you are timing homebuying based on interest rates dropping significantly, you could miss out on a good deal. It’s better to buy a home when you find one that’s suitable and in your price range, then to hinge your house hunting endeavors on interest rates dropping to the historically low rate of 2.65% that we saw in 2021. Right now, interest rates remain in the 6% range for a 30-year fixed-rate, which is also bad news for homeowners waiting patiently for lower rates so they can refinance.
The rule of thumb for refinancing is, if current interest rates offer a 1% or greater reduction in the interest rate of your mortgage, it may be worth considering refinancing. Yet, with the time it takes to refinance, and the costs involved, waiting for a bigger reduction in rate may be wise, unless you have a high credit score. A terrific credit score is a gateway to better deals– better interest rates and better terms. With a high credit score, you will have the power to negotiate and lower or eliminate fees.
If you are timing homebuying based on interest rates dropping, you will be in for a very long wait. The mortgage rate forecast for 2025 shows interest rates staying around 6% throughout the end of the year, so if you have your down payment saved and your credit score is at a level that will help you and not harm you, start house hunting when you are a ready and buy a home when you find the home of your dreams at a price you can afford.