Real Estate Myth 15

This is a continuation of a series of posts inspired by a conversation with an acquaintance who revealed a good deal of ignorance about the real estate profession. Because I think an educated market benefits everyone, I intend to debunk as many myths as possible. I hope you find this information useful. Please feel free to comment!

Myth #15 - I heard that the government will force interest rates to 4%. I'll wait for rates to drop.

Fact - The Fed rate is different from the mortgage rate. Lenders CANNOT lend money for less than they pay to borrow! If they did, they would lose money and go out of business (sound familiar?).

If a lender charged a borrower 4% for a mortgage, the lender would have to borrow at a lower rate (3%). The chances of a bank borrowing your mortgage for 3% are, to put it mildly, slim to none. At today's historically low rates, banks are already borrowing at historically low rates, for them just over 4.5%.

You will never see lower rates than you'll see today (remember when mortgage rates were 16%)? If you're waiting for a lower rate, you're trapped in a myth. The chances of mortgage rates increasing (and fairly soon) are much, much greater than of rates decreasing.

Waiting for rates to drop before you buy is like waiting for your age to reverse. Ain't gonna happen.

There has NEVER been a better time to buy than NOW! Don't wait for interest rates to drop (they will never drop to 4%). Don't wait for the value of homes to start to increase again. NOW is the time. If you wait even three months, you'll lose the $350+ a month you'd save by locking in on today's rates.