Mortgage Rates Drop for First Time This Year

Finally, a small drop in mortgage rates down to 7.5%. This will bring some buyers back to the market, and keep prices steady despite the holiday slowdown.

https://www.cnn.com/2023/11/09/homes/mortgage-rates-november-9/index.html

Mortgage Rate or Sales Price -- Choose One

In just about any market, you have to choose between a low interest rate and a high price, or a high interest rate and a low price. It's just the way of housing supply and demand.

Between 2020-2022, the interest rates were low, but prices were astronomically high. We're talking overbidding by 25-30% in some cases. Ridiculous--just to get a rate that you're going to refinance down the line, pay off or end up selling before the 30 years is up? The wiser thing to do is to buy at a discount and refinance later. 

You buy a property worth $1M for $1.3M, at a 3% interest rate. You're paying nearly $3750 a year more on property taxes.

You buy a property worth $1M for $950K, at a 7% interest rate. You're paying $4375 LESS a year in property taxes, and also get a tax write-off on the mortgage interest, so you end up paying about the same (or less per month if you put a bit more down to offset) as the $1.3M house. Not only that, you'll end up refinancing when mortgage rates drop, or having enough equity in the shorter term future to cash out or trade up. 

“Outperforming the majority of investors requires 

doing what they are not doing.” 

- Sir John Templeton

Buy Down Your Interest Rates and Get the Rate You Want

Once markets shift, people get creative. We're in a 6.75%-7.25% interest rate range right now. While this is WAY higher than last year, it's still only 1% higher than it was in 2007. That said, did you know you can ask the seller to buy down a mortgage rate? Yes, in this climate and depending on the house and the builder, you can ask the seller to pay a point or two. This is pretty damn amazing, and the little loophole that buyers can use to get rates from a few months ago. I just did this for a buyer recently, and the seller didn't even argue.

Some criteria:

- Must be primary residence

- Approved for condos, 2-4 units, SFRs

- 30 year fixed only (no ARMs)

- Borrower will still need to be preapproved and qualify