Should You Buy a Home Now or Wait for Lower Interest Rates?
If you’re thinking about buying a home in Albuquerque, Rio Rancho, Corrales, Placitas, Los Ranchos, or the East Mountains — including Tijeras, Edgewood, Cedar Crest, and Sandia Park — you may be asking yourself the same question a lot of buyers are asking right now:
Should I buy a home now, or should I wait for interest rates to come down?
It’s a good question. Obviously, everyone would rather have a lower mortgage rate and a lower monthly payment.
But your interest rate is only one part of the equation.
There are opportunities in today’s real estate market that buyers may not realize are available — including less competition, more negotiating power, builder incentives, and even lower interest rates on some brand-new homes.
Looking for a Lower Interest Rate? Consider New Construction
If getting a lower interest rate is important to you, there may be some great opportunities with brand-new construction homes in Albuquerque and Rio Rancho.
Some builders offer special financing incentives when you use their preferred mortgage company, including interest rates that may be lower than what is typically available on the market.
Incentives can vary by builder, community, and even by the specific home you choose. Depending on what’s being offered, incentives may include lower interest rates, interest-rate buydowns, contributions toward closing costs, or other eligible expenses.
This can make a brand-new home worth comparing with a resale home — especially if your main concern about buying right now is the interest rate.
We can help you compare new construction communities throughout Albuquerque and Rio Rancho, find out what incentives are currently being offered, and determine which options may make the most sense for you.
If you want to learn more about new homes and lower interest rates, call Mike & Dawn Bigelow at 505-318-1000.
IMPORTANT: When you first visit a model home or new-home community, be sure to tell the sales representative that you’re working with Mike & Dawn Bigelow.
The sales representatives at the model homes are friendly, knowledgeable, and a great resource when exploring their homes and communities; however, they represent the builder. Mike & Dawn Bigelow represent YOU.
Buying AND Selling? We Can Help You Save Even More.
If you already own a home and are thinking about making a move, there’s another big savings opportunity to consider:
BUY YOUR NEXT HOME WITH MIKE & DAWN BIGELOW, AND WE WILL LIST YOUR CURRENT HOME FOR FREE!
That means you can take advantage of today’s buying opportunities while also potentially saving thousands of dollars when selling your current home.
A Higher-Rate Market Can Create Opportunities for Buyers
It might surprise you, but a higher-interest-rate housing market can actually create some great opportunities for homebuyers.
When mortgage rates are higher, some buyers decide to sit on the sidelines and wait.
That means fewer buyers may be competing for the same home.
For buyers who are ready to purchase, less competition can create opportunities that may be harder to find when rates are lower.
Depending on the home and current market conditions, buyers may have more negotiating power when it comes to the purchase price, closing costs, repairs, seller concessions, or other terms.
Instead of competing against multiple buyers and feeling pressured to make an immediate decision, you may have more time to find the right home and negotiate a deal that works for you.
What Happens When Mortgage Rates Come Down?
Lower interest rates are great for buyers because they can lower monthly payments and increase buying power.
But there’s another side to lower rates that’s important to understand.
When mortgage rates come down, buyers who have been waiting may decide it’s time to start shopping for a home.
That means more buyers in the market.
When there are more buyers looking for homes — especially when the number of homes for sale is limited — competition can increase and home prices can be pushed higher.
We saw an extreme example of this during the covid-era housing market. Mortgage rates fell to historically low levels around 3%, buyer demand increased dramatically, and home prices climbed rapidly in many areas.
Interest rates aren't the only factor affecting home prices. Housing inventory, employment, the economy, new construction, population growth, and local demand all play a role.
The important thing to remember is that both higher-rate and lower-rate markets can create opportunities for buyers.
The key is understanding how to take advantage of the market you’re buying in.
You Can Potentially Refinance Your Interest Rate Later — But You Can't Change Your Purchase Price
Here’s the way we like to look at it:
If you buy your home at a good price today and mortgage rates come down later, refinancing can give you an opportunity to lower your interest rate and monthly payment.
That can be a great position to be in.
You may have an opportunity to take advantage of less competition and more negotiating power today — and potentially take advantage of a lower interest rate in the future.
But there’s one thing you can’t refinance: The price you paid for your home.
That’s why the purchase price matters.
Finding the right home at a good price today can give you the best of both worlds: a home you love at a price that makes sense, with the possibility of refinancing if more favorable interest rates become available later.
Don't Wait for the “Perfect” Market — Look for the Right Opportunity
Nobody knows exactly what mortgage rates or home prices will do next.
And you don't necessarily need a “perfect” housing market to find a great opportunity.
Instead of trying to perfectly time interest rates, it can make more sense to look at the entire picture:
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What homes are available right now?
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How much competition is there from other buyers?
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Is the seller willing to negotiate?
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Can you negotiate closing costs or other concessions?
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Are interest-rate buydowns available?
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Are builders offering special financing incentives?
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What would your monthly payment be?
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How much cash would you need at closing?
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How long do you plan to own the home?
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Does the home fit your needs?
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Does buying make sense for you right now?
The best opportunity isn’t necessarily the market with the lowest interest rate.
Sometimes it may be the market where you can buy the right home at the right price, with terms and a monthly payment that work for you.
What About Buying a Home in Albuquerque or Rio Rancho?
Real estate is local.
What’s happening nationally doesn’t always tell you exactly what’s happening with homes for sale in Albuquerque, Rio Rancho, and the surrounding areas.
Different neighborhoods and price ranges can behave very differently.
One home may receive multiple offers, while another seller may be willing to negotiate on price, contribute toward a buyer’s closing costs, or consider other concessions.
There are also brand-new home communities throughout Albuquerque and Rio Rancho where builders may offer incentives on select homes.
That’s why buyers should look beyond national headlines about mortgage rates.
We can help you look at what is actually happening in our local market, compare resale homes with new construction, explore available incentives, and find opportunities that fit what you’re looking for.
So, Is Now a Good Time to Buy a Home?
For many buyers, now can be a great time to explore your options.
A higher-interest-rate market can offer something that was extremely difficult to find when mortgage rates were around 3%:
Less competition and more negotiating power.
And if a lower interest rate is still your priority, new construction may provide another opportunity. Some builders offer special financing incentives on select homes when buyers use their preferred mortgage company.
Instead of asking only: “Are interest rates high or low?”
We think there’s a better question: “Can I find the perfect home for me, at the right price, with a payment that makes sense for me?”
If you can, there may be a great opportunity available right now.
Frequently Asked Questions- About Buying a Home and Interest Rates
If I Buy a Brand-New Home With a Lower Interest Rate, Can I Buy a More Expensive Home for the Same Monthly Payment?
Potentially, yes. A lower mortgage interest rate means less of your monthly principal-and-interest payment goes toward interest.
Because of that, you may be able to finance a higher-priced home while keeping your principal-and-interest payment similar to what you would pay on a less expensive home with a higher interest rate.
For example, a brand-new home with a builder offering a special lower interest rate through its preferred mortgage company could potentially have a similar monthly principal-and-interest payment to a lower-priced resale home financed at a higher market rate.
That’s one reason we recommend comparing the monthly payment, not just the price of the home.
Your total monthly housing payment can also include property taxes, homeowners insurance, mortgage insurance, HOA fees, and other costs, so it’s important to compare the entire payment.
Sometimes the home with the higher price tag may be more affordable per month than you expected.
Should I Wait for Mortgage Rates to Come Down Before Buying a Home?
When rates are higher, there may be fewer buyers competing for homes. That can give you more time to shop and potentially more negotiating power on price and terms.
The goal isn't necessarily to wait for the lowest possible interest rate.
The goal is to find the right home, at the right price, with a monthly payment that works for you.
Can I Refinance My Mortgage if Interest Rates Go Down?
Yes. Refinancing can be a great opportunity if interest rates come down in the future.
If you buy a home today and rates drop later, refinancing may allow you to replace your current mortgage with a new loan at a lower interest rate.
Depending on how much rates change, that could lower your monthly payment and reduce the amount of interest you pay over time.
That’s one of the advantages of buying when there may be less competition in the market.
You may be able to purchase the right home at a good price or negotiate favorable terms today, and then potentially take advantage of a lower interest rate through refinancing later.
You may have an opportunity to lower your interest rate in the future, but the great price you negotiated on your home today is yours to keep.
Refinancing is subject to qualification and costs, so your mortgage professional can help you determine when the potential savings make it worthwhile.
Do Home Prices Go Up When Mortgage Rates Go Down?
They can. Lower mortgage rates can increase buying power and bring more buyers into the market. When demand increases, especially when inventory is limited, increased competition can push home prices higher.
Is It Better to Get a Lower Home Price or a Lower Interest Rate?
A lower home price can be the better opportunity because you may be able to refinance into a lower interest rate later. You can refinance your mortgage rate, but you can’t refinance the price you paid for your home.
Are There Ways to Get a Lower Mortgage Rate When Buying a Home?
Yes! Some new-home builders offer special lower interest rates or rate buydowns when you use their preferred mortgage company. Other options may include seller contributions or buy down points to help lower your rate.
Ready to Explore Homes in Albuquerque, Rio Rancho & the Surrounding Areas?
If you’re thinking about buying a home in Albuquerque, Rio Rancho, Corrales, Placitas, Los Ranchos, Tijeras, Edgewood, Cedar Crest, Sandia Park, or the surrounding areas, Mike & Dawn Bigelow can help you explore your options.
Whether you're looking for a resale home or brand-new construction, we can help you compare homes and communities, understand current market conditions, explore available builder incentives, negotiate price and terms, coordinate inspections and walk-throughs, and represent you throughout the home-buying process.
And if you already own a home and need to sell before making your next move, remember:
BUY YOUR NEXT HOME WITH MIKE & DAWN BIGELOW AND WE WILL LIST YOUR CURRENT HOME FOR FREE!
Ready to see what’s available?
Search homes at NMmoves.com or call Mike & Dawn Bigelow at 505-318-1000.
Mortgage rates, home prices, market conditions, builder incentives, and financing options can change. Refinancing is subject to qualification, available loan programs, costs, and market conditions. Builder incentives vary by builder, community, home, lender, and eligibility. “List your current home for free” is subject to program terms, eligibility requirements, required agreements, and successful closings.
Mike & Dawn Bigelow | Realty One of New Mexico | 505-318-1000 | NMmoves.com
