Have you been waiting to buy a new home because of rising interest rates? Take a look at the benefits of lower interest rates now. It’s a good time to start your search for a new home and get the right one affordably.
The Federal Reserve cut interest rates by 50 points in September 2024, the first drop in 4 years. While this change doesn’t automatically affect interest rates, it’s a sign of good things to come! The Federal Reserve drops rates as inflation goes down. This latest action is a sign that there are better things to come! The 50-point cut is expected to lead to lower mortgage interest rates by 2 points in the next 12 months. The mortgage rates, which had reached a 23-year high in 2023, have been dropping in 2024.
The cost of waiting to buy a home
While you hesitate to buy a new home, pay attention to the increase in home prices. They’re going up. If you buy now, you could begin earning equity almost immediately. That means your investment is already paying off.
Conversely, if you wait until rates drop further, you’ll end up financing a larger loan because you’ll be paying more than if you purchased now. Or you’ll pay the same price but get less for your money.
Weigh the real benefits of a lower rate
If you buy now, as rates are starting to drop, do you know how the change will affect your life? Forbes Capretto Homes has some specifics for you to consider.
Lower borrowing costs for a new home.
Mortgage interest rates are now about 2% lower than mid-2023. But what does that number mean in terms of what you pay monthly for your mortgage?
For a $400,000 mortgage—the amount you borrow, not the purchase price—the monthly payment would be $540 less per month with a 2-point drop in the interest rate, based on a 30-year fixed rate mortgage.
What could you do with a savings of $540? Use it for more breathing room in your monthly budget OR the opportunity to purchase more home—for example, something larger, with more features, or maybe a better location. The $540 per month figure equates to about $90,000 in additional buying power! *
Reduce the monthly cost for other loans.
Lower interest rates don’t just impact your mortgage. All of the other places you access credit will cost you less as well. Everything from leveraging the equity in your home to car loans and credit card bills could reflect lower monthly payments.
When you reduce those monthly payments, you might be able to reduce your overall debt and increase your credit score. Both of these outcomes lead to potentially qualifying for a larger mortgage at a lower interest rate.
Save on day-to-day expenses.
Another of the benefits of lower interest rates now shows up in paying less for other things you need, Gas prices are dropping. The cost of groceries and home goods will go down along with the drop in inflation we’re seeing.
Get more value when you build a new home
Are you ready to use the benefit of lower interest rates now to become a homebuyer? You have another decision to make: buy a resale home or a new construction home. You might think that a “used” home is like a used—or “pre-owned”—vehicle. It costs less, right?
This year, the cost of buying a new home is actually LESS than a resale home! In August 2024, the median price of a new construction, single-family home in the United States was $420,600, while an existing home had a median price of $422,100.
It’s not a big difference but think about what you’re getting while also paying less for a new construction home:
Builder’s warranty: You don’t have to worry about whether you’ll have repair or replacement costs, like a new roof, furnace, air conditioning system or water heater. Your home is covered by warranties—including the appliances, flooring, windows, cabinets, plumbing, electrical, and structural issues. Can you say the same thing about buying someone else’s home?
Energy efficiency: The homes being built today feature a higher level of energy efficient materials, practices, and features. In addition to saving on the cost to buy a new home, you’ll pay less for the energy to keep it comfortable and safe.
Modern features: Your new construction home includes the latest in design and home technology trends. In the kitchen, your cabinets, countertops, lighting, and appliances reflect current design and homeowner preferences. Your new home is wired to today’s standards for networking so you’ll move in and immediately enjoy a more robust, consistent signal throughout your home, without dead zones. Flooring, trim, window and door styles, lighting fixtures, cabinetry design and hardware, and even the floor plan are current with modern home styles.
Move-in ready: Once you close on a resale home, you might have set aside funds to do the renovations and repairs. But maybe you have to postpone those because the cost of buying the home didn’t leave enough for fixing it up. With a new construction home, you move right in. There are no rooms to repaint, floors to replace, or bathrooms or a kitchen to update. That means you save time and money.
One of the huge benefits of building a home is that you lock in the price of your new home when you sign the contract. Then, you typically have time to sell your current home, about 6 to 8 months, while your new home is under construction. When you decide to buy a resale home, you have to move faster. Maybe you put a contingency in your offer that you need to sell your home in order to close on this one. That’s added pressure that might lead to accepting a lesser offer!
With rates dropping and the subsequent increase in home values that typically follow, you can use this extra time to your advantage and add thousands of dollars to your bottom line.
New construction homes in Western New York
Forbes Capretto Homes has been building communities of new homes for sale in Western New York for more than 30 years. Over the next few months, we’ll be launching new neighborhoods as well as offering enticing values in our current communities. There has never been a better time to build a new home in the Buffalo area than right now. And no better builder to partner with than Forbes Capretto Homes.
Our Design, Build and BeyondⓇ process has been carefully developed to make it easy for you to find the location and floor plan that suits you, select the details, and follow the progress as your vision of a dream home becomes a reality. If you already have a location in mind, let Forbes Capretto Homes build on your lot.
Contact Forbes Capretto Homes to take advantage of the benefits of lower interest rates now. Discover the quality and value you gain with a new construction home in today’s market.
*Based on a 2 point drop, for example purposes only
