Mortgage Rates Cross 7%: What Does That Mean for You?

Mortgage rates have moved back above 7%, and if you're thinking about buying a home or refinancing, you may be wondering:

Should I wait?

Can I still afford to buy?

Are there ways to lower my payment?

What happens if rates come down later?

Those are all reasonable questions.

But before you let one mortgage rate headline change your plans, it's important to understand what today's rates actually mean for your specific situation.

Because the rate is only one part of the equation.

7% Sounds Much Worse Than 6.95%

There is something psychological about crossing a big round number.

At 6.95%, it sounds like mortgage rates are still “in the sixes.”

At 7.03%, suddenly the headlines say:

“Mortgage Rates Are Above 7%.”

But the actual difference may be smaller than you think.

For example, on an $800,000, 30-year mortgage:

At 6.95%, the principal and interest payment is approximately $5,296 per month.

At 7.03%, it is approximately $5,339 per month.

That's a difference of about $43 per month.

Higher rates certainly matter, but a small change in rate doesn't necessarily mean you should abandon your plans.

The better question is:

Can we structure the loan and purchase in a way that works for your budget and goals?

Payment examples are principal and interest only and do not include property taxes, homeowners insurance, HOA dues, or mortgage insurance.

Should You Wait for Mortgage Rates to Come Down?

Maybe.

But waiting also comes with tradeoffs.

No one knows exactly where mortgage rates will be six months or a year from now.

Rates could decline.

They could remain around current levels.

They could also move higher.

Meanwhile, home prices, available inventory, competition from other buyers, and your own financial situation can change.

Instead of trying to perfectly time the market, I prefer to look at whether buying a home today makes sense based on:

Your comfortable monthly payment.

Your available cash.

How long you expect to own the home.

Your income and future financial goals.

The specific property you're considering.

And the financing opportunities available in the transaction.

If the numbers don't work, we know that.

If they do work, you can make your decision based on facts rather than headlines.

Your Interest Rate Isn't Your Only Option

One of the most important things to understand in today's mortgage market is that the quoted interest rate isn't necessarily where the conversation ends.

Depending on your loan and purchase transaction, there may be several ways to improve affordability.

Ask the Seller to Help With Your Financing

In some transactions, sellers may be willing to provide concessions that can be used toward your financing costs.

Instead of simply asking the seller to reduce the price of the home, we can compare whether those same dollars could provide you with a larger benefit when used t