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I’m Buying a House Despite Mortgage Rates Being High. Here’s Why

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I am buying a home very soon. I am doing this despite the fact that mortgage rates are pretty high right now. As of the week of Sept. 7, 2023 the average rate on a 30-year fixed rate mortgage was 7.12%, while the average rate was at 5.89% as of Sept. 8, 2022 and 2.88% as of Sept. 9, 2021.

I am well aware that mortgage rates are not very competitive at the moment, since I write about this topic just about every day. And I’m not very happy about paying such a high interest rate when I buy my house (who would be?!). But, despite my dismay at all of my hard-earned cash that’s going to end up in my mortgage lender’s pocket, I’m moving forward anyway.

Here’s why.

It’s the right choice for my family

The biggest reason why I am moving forward with buying a home despite high mortgage rates is because it’s the right thing to do for my family.

We want to live in a particular neighborhood where rental properties that are large enough for our family are not readily available. Our son will be starting school next year, and we want to be settled in our home and not have to move again.

The reality is, buying a home is both a financial and emotional choice as well as a lifestyle decision. We want to get our kids settled into a place where we can set down roots and we are willing to pay a premium in the form of higher rates so we don’t have to put that off.

If you are in a position where you want to become a homeowner, putting this dream on hold in hopes of better future rates (which may not come any time soon) doesn’t necessarily make sense. You can’t always delay living the life you want just because it’s not the optimum time to make a purchase.

I can afford it

While I don’t want to put off homeownership, as I mentioned above, there’s also another crucial factor in play here. I can afford to buy my house despite the fact that rates are pretty high right now. And I wouldn’t be moving forward if this isn’t the case.

I was able to sell my prior home for a pretty good profit so I’m making a generous down payment on this house. I also bought a property that was well within my home-buying budget. So despite the fact rates are high, I’m not compromising my security — or my other financial goals — to be able to buy.

No matter how eager you are for homeownership, you absolutely should not move forward if doing so would be a financial strain. If your total housing costs would be more than 25% of your income, you may not want to move forward with the purchase. You could find yourself house poor, devoting so much of your income to your housing costs that doing other important things isn’t possible.

I hope to refinance soon

Finally, the last big reason I’m OK with buying a house at a bad time for mortgage rates is because I know I’m not stuck with this loan forever.

If I get lucky and rates go down, I can — and will — refinance my mortgage and take advantage of it. But if rates end up going up instead, I’ll already have my loan locked in and I won’t have to worry about it.

If you’re put off by today’s high rates, remember that you’re taking a one-way risk when you buy now. You get to make your loan cheaper if rates fall, but your rates won’t increase once you have your loan (unless you got an adjustable-rate mortgage). By acting now, you protect yourself against future possible rate increases while preserving the chance to get a more affordable loan later.

Buying a home may not be the best choice for you in this climate. But if you have money for a down payment, your credit score is in good shape (around 700 or higher so you can qualify for the best rates on offer now), and your housing costs won’t be more than 25% of your income, don’t let today’s rates scare you into putting your homeownership dreams on hold.

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