Waiting for your credit to improve, the market to soften, or simply to save more for a down payment can end up hurting you in the long run. As interest rates rise, it may negate any savings you would have experienced from an improved credit score or larger down payment. In addition you may cost yourself the home or the neighborhood you wanted to live in.
As interest rates rise so do potential payments for the same loan. In this case you could price yourself out of a home by waiting because the payment could become to high for you to afford it. You may have to reduce the amount of home you can get in order to qualify and therefore might have to look in another neighborhood. Not something you want to happen if that was the school district you wanted your kids to be part of.
The cost of waiting is real as the attached chart shows. As interest rise 1% you lose 10% purchasing power. So if you were approved for a 200,000 home loan and interest rates went up 1%. You would need to get a loan for 180,000 to keep the same payment. That’s a huge difference. If you want to see what you qualify for click: APPLY NOW