Mortgage Rates Are High Right Now, But You Should Still Be House Hunting

Yes, mortgage rates are high, but no, it shouldn’t stop you from house hunting. Just ask Bianca D’Alessio. A licensed associate real estate broker, star of “Selling the Hamptons” on Max, a founder of The Masters Division, and the managing director at Nest Seekers Development Marketing, D’Alessio knows that buying a home is a huge decision involving your head and your heart. By getting your money strategy locked down now, you can get that much closer to home (even in this market). 

FEATURED EXPERT: BIANCA D'ALESSIO

Bianca D'Alessio - Licensed Associate Real Estate Broker and the managing director at Nest Seekers Development Marketing

Should I be waiting to buy a house? 

You should definitely not be waiting. There is so much pent-up activity in the market right now. It's expected that there's going to be a huge resurgence of buyers entering the market when interest rates eventually come down. That is surely going to drive prices up in an already very low-inventory environment, so it's just going to get even more competitive once rates come down.It’s a frustrating market. The cost of living everywhere has gotten so expensive, and the real estate market is very high and hot right now. However, just looking at the macro trends that we're seeing, it's not in anyone's best interest to wait longer for some sort of correction or for rates to come down. Inventory levels are low. The cost of construction is still super high. As soon as rates start to come down, it's going to be far more frustrating and unaffordable for buyers. So if you're able to get into the market now, it's better to get in than to wait.

Does my credit score impact my ability to buy a house?

It impacts it a lot. If you are thinking about purchasing, finding ways to pay off your debt and increasing your credit score are super important. The higher your credit score, the better rate you're going to be able to get, and the more advantageous financing terms and conditions you'll be able to qualify for. Having a very clear idea of what your monthly financial obligations are and your debt is important when deciding what to pay off first versus what you push off to later. Credit card debt is without a doubt the first thing that you should pay off because that is what the bank will look at when it comes to financing. Other debts, like student loans and car loans, are ones that you can still hold onto, but you still need to be very clear and concise on your budget. 

What are some tips for getting the best mortgage rate?

It is so important to shop for rates, especially in this high-rate environment. Look at four to six different lenders at various banks and financial institutions, and ask questions about refinancing and what costs are associated with doing so. That way, you're best prepared for the future. A preapproval doesn’t mean you need to use that lender, but it’s still important to shop rates. 

Is it better to pay a larger down payment?

I always recommend that you should pay enough to avoid private mortgage insurance (PMI). That’s such a big hit. I think it depends on your income level and what you feel comfortable paying monthly when you decide how large your down payment should be. You certainly can earn a lot of money in this current stock market environment versus having it tied up in your down payment. However, if you want to keep your monthly payment low, you should put more money down. So I think that's such an individual decision. Think about how you want to use your money, and about the implications of different mortgage payments. It comes down to what you can afford. 

Is a home a good long-term investment?

The answer is so different for everyone. If your family is growing and you need a family home, you can't put it off. Someone who plans to own a home purely for investment, with a horizon of three to five years, is much different than someone who's buying their forever home for the next 20 to 30 years. Some clients who are buying their forever homes are hung up on rates and high prices. I say that it does not matter what the price looks like today if they plan to live there for 20 to 30 years. So many clients want to check every single box because it’s so expensive out there. But in any market, you’re going to make compromises. Be clear on your absolute needs versus your wish list. These are two different things. You have to be willing to compromise on those in order to get into the market now.

This interview has been edited and condensed for clarity.