Anyone who has ever bought a house knows how important the mortgage rate can be in guiding their decision making. High interest rates can dissuade people from deciding to buy, and when rates fall, many people rush into the market. If you are looking at homes in the Charleston area, it is therefore important for you to pay attention to the trends in mortgage rates.
When looking for Charleston SC real estate, there are, of course, three basic ways rates can behave. They can go up, they can go down, or they can stay the same. Obviously this may seem simple, but this apparent simplicity can mask a great deal of complexity that you need to account for in your decision making. Ignoring this complexity can end up costing you a lot more than you need to spend.
For example, you might think that when rates are going up, this is a time to avoid buying a house. However, what you need to remember is that many other people will be feeling the same way. Fewer people will be interested in purchasing a home, which means that demand will drop.
As demand drops, basic economics tells you that prices will also fall. In such a case, this may actually be a good time to start looking for a home, even though interest rates are higher than they used to be. The savings from the reduction in price may actually offset the additional interest that you will have to pay due to the rise in rates.
Conversely, just because interest rates are falling does not mean that you should rush out and start looking for a house to buy. As interest rates fall, more buyers enter the market, which means that demand goes up. Increasing demand means that there is now a seller’s market, which means that prices will rise.
The savings from the lower interest rates may not offset the increased prices that you will have to pay. Just as rising interest rates may actually be a sign that it is time to buy, falling interest rates can indicate that you should be hesitant about leaping into the market.
When interest rates are flat, on the other hand, you will have to take other factors into consideration. If rates are generally stable, this means that the decision to buy will be governed by other factors, such as the general supply of homes. Whether or not it is a good time to look for a house will depend upon these factors, as well as on your personal financial situation.
While interest rates are important in the home buying process, they are not the only factor that you need to take into consideration. It is never a good idea to base your decision solely on interest rates. They can play a major role, but they should not be your sole consideration.
When you are looking for a home in the Charleston area, pay attention to the mortgage rates. Keep an eye out for the best rate so that you can save as much money as possible on the deal.