Should I Wait for Mortgage Rates to Drop in Western New York?

By Merritt Kreutzer, REALTOR® | WNY Metro Roberts Realty

Should I wait for mortgage rates to come down before buying or selling in Western New York? As a real estate agent in Lancaster, I would say that waiting makes sense only if you have a reason beyond the rate, because nobody can reliably tell you where rates are headed, and your life keeps moving while you wait.

That is not the same as saying rush. Higher rates do not remove buyers from the market. They make buyers more careful about value. The better question is whether the payment works for you today, whether your reasons for moving are lasting ones, and what you can do about the rate besides wait. I will take those one at a time.

Can anyone tell you where mortgage rates are going? No one can do it reliably, and that includes lenders, economists and agents. Rates move with inflation, the bond market, the economy and decisions made far from Lancaster, and they can change in either direction faster than most people expect.

That is why I do not put a rate number in this article. Any figure I printed would be out of date by the time you read it. Ask a lender for today's number, in writing, and treat anything beyond that as a guess.

What does waiting actually cost? It depends on what you are waiting to do, but there are real costs on both sides, and they are easy to overlook because they do not show up on a rate sheet.

If you are a buyer, the home you want may sell to someone else, and prices can change while you wait. If rates do come down, more buyers tend to come back at the same time, which can mean more competition for the same homes. Nobody can say how much, but it is worth knowing that a lower rate and a calmer market do not always arrive together.

If you are a seller, the cost is usually carrying the house. Taxes, utilities, insurance and upkeep keep running month after month, and a house that sits through another season may need another round of preparation. Waiting for a better market can work out, and it can also leave you in the same spot with less time.

Then there is the cost that does not have a dollar sign: the reason you wanted to move. A parent who needs fewer stairs, a job in another city, one household becoming two. Those timelines do not wait for the bond market.

Can you buy now and refinance later if rates drop? Sometimes, but I would not make the decision on the assumption that you can. A refinance is a new loan. It has its own approval, its own closing costs, and it depends on your income, credit and the home's value at that time.

Whether it makes sense also depends on how much the rate drops and how long you plan to stay. The only reliable way to know is to ask your lender what a refinance would cost and what you would have to save to make it worthwhile. If the payment only works when you refinance, I would slow down before buying, not after.

What can you do about the rate when you buy? More than most buyers expect, and the first step is choosing a lender who works Western New York closings regularly.

• Lock the rate. A rate lock is a lender's written commitment to hold a rate for a set period before closing. The Consumer Financial Protection Bureau notes that locks commonly run 30, 45 or 60 days, and that some lenders charge for them or for extending them. A lock also protects you if rates rise, but it can keep you from a lower rate if they fall, unless your lender offers a float-down option. Ask which one you are getting.
• Ask what happens if closing is delayed. Closings here commonly run about sixty days from an accepted offer. If your lock is shorter than that, find out what an extension costs before you need one.
• Ask about a seller-paid buydown. In some purchases, the seller puts money toward lowering the buyer's rate or payment for a period of time, instead of lowering the price. Whether this is allowed, how much, and how it affects your loan depends on your loan program, so ask your lender for the details in writing.
• Compare the whole payment, not only the rate. Taxes, insurance and the loan type change what you actually pay each month. A lender can show you two or three versions side by side.

I connect the buyers I work with to a lender who understands how closings run in Western New York before they make an offer. If you are also weighing how the order of selling and buying fits your timeline, my article on whether to sell first or buy first walks through it.

How do rates affect you if you are selling? In two ways. The first is on the buyer's side. When rates are higher, buyers look harder at price and condition, so a house that is priced and prepared well still draws attention, and one that is not can sit. A strong market can still punish an overpriced listing.

The second is on your side if you are buying your next home. Many people in Western New York have a mortgage with a rate lower than anything available today. In most cases that rate stays with the loan, not with you, so selling means your next loan starts at the current rate. That is a real part of the math, and I would run the actual numbers with a lender before you decide, not guess.

It does not mean you should stay put. It means the question is whether the move is worth it for what it gives you: less maintenance, more room, a different location, or a simpler life. My articles on downsizing in Western New York and knowing when you are ready to upsize both cover that part.

How do you decide whether to move now or wait? I would ask three questions.

1. Does the payment work at today's rate? Not at a rate you hope for later. If it works today, a lower rate is a bonus. If it only works later, that is a different plan.
2. Are your reasons lasting? A move you have wanted for two years for solid reasons is different from a decision you made this month because you were frustrated.
3. What does your timeline look like? A school year, a job, a parent's care or a lease ending may set the date for you.

If all three point toward moving, waiting for a lower rate usually costs you more than it saves. If the answers are mixed, that is a good reason to wait, and I would rather you wait with a plan than move without one. A conversation about your numbers and your timing costs you nothing, and my guide to selling your home and the page for move-up buyers show how I lay out the order.

What mistakes do people make when they wait for rates? There are three I would watch for.

The first is treating the rate as the only number. Price, taxes, insurance, repairs and the closing timeline all affect what a purchase costs. A slightly lower rate on the wrong house is not a better deal.

The second is waiting without a trigger. "I will move when rates drop" has no end date. If you do want to wait, decide in advance what would change your mind, such as a rate you can afford, a date, or a life event, so waiting does not become a way of not deciding.

The third is skipping the lender conversation. Many people assume what they can afford from headlines. A local lender can tell you your actual range in an afternoon, and that answer is often different from what you expected.

Consider two hypothetical situations. These are illustrations, not client stories.

One couple in Lancaster wants more space and has been waiting for rates to fall for a year. When they sit down with a lender, they learn that the payment works at today's rate with room to spare, and the real holdback was a feeling that they should wait. They start looking, and a lock with a float-down option covers the part they were worried about.

Another homeowner has a very low mortgage rate and is thinking about downsizing. After running the numbers, they see that the new payment is higher than they want, so they choose to stay one more year, with a plan to look again when they know what would make the move worthwhile. They are not frozen. They are waiting for a reason.

If you are not sure whether to wait, start with a free conversation about where you are trying to go. Tell me what is driving the move and when you would like it done, and I will lay out the order that fits, including what to ask a lender before you decide.

Is it better to buy now or wait for mortgage rates to drop?

It depends on your reasons, your payment and your timeline, not on a guess about rates. If the payment works today and your reasons are lasting, waiting often costs more than it saves. If the numbers only work at a lower rate, waiting may be the right call, with a clear trigger for when you will act.

Can I refinance if rates go down after I buy?

Often, but it is not guaranteed. A refinance is a new loan with its own approval and closing costs. Ask your lender what a refinance would cost and what the savings would need to be before it pays off, and do not buy a home that only works financially if you refinance.

Should I sell my house if I have a very low mortgage rate?

Not automatically. In most cases a conventional mortgage rate does not move with you to the next home, so your next loan will start at the current rate. Whether the move is worth it depends on what the new home gives you. Run the actual payment with a lender before you decide.

What is a rate lock and how long does it last?

A rate lock is a lender's written commitment to hold your rate for a set period before closing. Locks commonly run 30, 45 or 60 days, but lengths and fees vary by lender. Ask what happens if closing runs longer than the lock and whether a float-down option is available.