Facebook
X
Pinterest
Copy Link
To Sell or Rent? How To Choose the Best Path for Your House.
Selling your house is a big step, and you want it to go smoothly. And with houses taking a little longer to sell these days, renting it out might start to sound like a nice backup plan.
But the reality is, while renting can work well for some people, it’s also a big commitment. So before you decide, it helps to see the whole picture first.
Why Some Sellers Are Deciding To Rent Instead
Lately, some sellers are choosing to hang on to their houses and rent them out instead. According to Parcl, around 9% of homes for rent right now were previously up for sale.
Here’s why.
Some homeowners put their houses on the market expecting a faster process than they got or a certain price buyers didn’t respond to. And when things didn’t go exactly as planned, they decided to rent instead. As Kara Ng, Senior Economist at Zillow, explains:
“Bargaining power is tilting toward buyers and homes are taking longer to sell, making renting out a property one way to buy time rather than compete aggressively on price.”
But here’s the important distinction. Just because some sellers are choosing to rent doesn’t mean selling isn’t working. In many cases, the difference comes down to how well a house is priced, prepared, and marketed for today’s buyers.
Parcl data shows where these “accidental landlords” – owners who planned to sell but decided to rent instead – are most common (see graph below):
They make up around 17% of homes for rent in places like Sherman and Houston, TX, but less than 4% in markets like Des Moines, IA and Bloomington, IN.
That’s a pretty big difference. And it shows why you have to know what’s happening in your neighborhood. Your market, your asking price, and your strategy all play a role in how your sale goes.
A local agent can show you how houses like yours are selling, what strategies work best, and help you weigh your options – not to push you to sell, but so you at least have the full picture based on today’s market. And part of making an informed decision is understanding what renting your house would actually take.
What Being a Landlord Actually Looks Like
While renting might sound like easy passive income on paper, in practice, it’s a hands-on job with rules to follow. As Invest West Management puts it:
“Even if you never intended to become a landlord, the law still sees you as one — and you must meet all legal obligations that come with that role. This often includes registering the tenancy, providing tenants with certain disclosures, and ensuring the property meets safety standards.”
You’d also be the one chasing missed rent payments, fixing damage between tenants, and covering unexpected repairs. Not to mention fielding weekend calls about leaky dishwashers or broken AC units.
There are expenses beyond regular maintenance and repairs, too. According to Bankrate, these are a few of the biggest:
- Insurance premiums (landlord insurance typically costs about 25% more than a standard homeowners policy)
- Management fees (if you hire a property manager, they usually charge around 10% of the rent)
- Gaps between tenants, when you pay the mortgage without rental income
How To Give Your House a Strong Start
If you want to be a landlord and you’re prepared for the responsibility, renting may be a great fit. But if you’d really rather sell, don’t let today’s market convince you that you can’t.
A great agent can make it happen. The key is having an open conversation up front with your agent about pricing and how to market your house. Nailing those details from day 1 helps your house make a great first impression, so renting doesn’t have to be your fallback.
Bottom Line
Renting can be a good fit for the right person with the right house, but it isn’t the only option. A smart sales strategy can help your house stand out to buyers from day one.
So, if you’re on the fence, let’s sit down and compare what selling and renting would each look like for you.
Confused by Home Price Headlines? Here’s Why.
Whether you own a house already or you’re looking to buy one, you probably care about home prices. But it’s not always easy to figure out what’s really happening right now, especially if you look at the headlines.
One says home prices are falling. The next says they’re still climbing.
So, which one’s right? It comes down to where you live.
What’s Really Going on with Asking Prices
Part of the confusion out there may be based on what’s happening to asking prices and how the media is talking about it. They’re calling attention to how asking prices are falling, but don’t give the full context or say that seasonality is at play. So here it is.
Right now, there are more homes on the market than at any other time since November 2019. And with mortgage rates rising since the spring, those homes are taking a little longer to sell. One way to help a home sell quickly in that environment is to have a lower asking price.
According to HousingWire Data, the median asking price is down from $449k in early August to $435k just 2 months later (see graph below):
That’s a dip of about 3%, and a lot of it is normal for this time of year.
Asking prices cool off every fall once the busy summer season wraps up. With fewer buyers this time of year, sellers price a bit more competitively. Today’s rates play a role too, since sellers are pricing to match what buyers can afford right now. And that’s a good thing. Smart pricing helps homes sell.
Just keep in mind, that’s a national list price. It doesn’t show what homes near you are actually selling for. So before you react to a headline, ask a local agent what’s really happening in your area.
Where You Live Changes Everything
Realtor.com explains:
“While national headlines might suggest a buyer’s market is taking hold, the reality on the ground depends heavily on where and what you’re trying to buy. Local trends can diverge sharply from national averages, especially when you factor in price range, property type, and post-pandemic market dynamics.”
The latest numbers from S&P Cotality Case-Shiller Index show how true that is. Over the past year, sales prices in Chicago rose almost 7%. In Seattle, they dipped about 1.6%. That’s a gap of nearly 9 percentage points between two major cities (see graph below):
That gap changes your game plan. Selling in New York, where prices are up almost 6%? You may not need to cut your price. Buying in Denver or Las Vegas? You may have more room to negotiate.
Why You Don’t Need To Worry About a Crash
Just in case you’re seeing those slight declines in some markets and worried it means a bigger crash is coming, here’s what you need to remember. Even in the major metros where prices are down, the declines are 2% or less. That’s a long way from a crash like 2008. And if you look back at the graph above, there are more cities in the green than in the red.
And over time, home values have a strong track record. The Federal Housing Finance Agency (FHFA) says national prices have grown year-over-year every quarter since 2012. Go back further, and a $100k home bought in 1991 would be worth about $436k today, even with the 2008 crash factored in (see graph below):
So, this short-term dip probably won’t stick around. The small declines we’re seeing now are in markets that overheated during the pandemic. As a whole, the market is headed back to normal – and normal means prices should rise over time.
Bottom Line
National headlines can’t tell you what your home is worth or how much room you have to negotiate. Local data can. If you’re thinking about buying or selling, let’s look at how prices are moving in your area, so you can set your price or make your offer with confidence.
Why There are More Homes for Sale Right Now (and What It Means for You)
Mortgage rates being back above 7% isn’t exactly the news most people wanted. But it’s changing the market in ways that matter whether you’re buying or selling.
The number of homes for sale is growing faster than it was this time last year. And interestingly, the main reason isn’t a flood of new listings. It’s because homes aren’t selling as quickly.
Here’s why – and what that means if you’re thinking about buying or selling.
Inventory Growth Is Picking Up Steam
According to HousingWire Data, after inventory growth slowed down for most of the past year, it’s accelerated again in recent weeks. You can see that in the graph below. Just look at the blue line:
And what’s behind this shift might surprise you.
When rates rise, some buyers hit pause. That means fewer homes sell each week. And as those unsold homes stay on the market alongside new listings, the number available starts to grow (see the blue line in the graph below).
Here’s another way to look at it to make it even more obvious. The graph below shows the relationship between rates and inventory. Again, this year is the blue line. Last year? That’s the green.
With rates inching up this year, you can see inventory has grown by about 25k. But when rates went down this time last year, buyers jumped back in, and inventory actually dropped by about 9k.
Logan Mohtashami, Lead Analyst at HousingWire, explains how that’s flipped from 2025 to 2026:
“With mortgage rates over 7%, demand tends to soften and inventory rises . . .”
Homes Are Spending More Time on the Market
Here’s another metric that shows the impact rates are having: time on market. Data from Realtor.com shows the typical home spent 61 days on the market this September. Back in September 2021, it was just 41 days (see graph below):
Here’s what that tells us. In 2021, when rates were low, more buyers were active, and homes sold fast. But now that rates are a bit higher, not as many buyers are interested, so it takes a bit longer to close a deal.
How To Make This Market Work for You
So, what does all of this mean for your plans? That depends on which side of the move you’re on:
If you’re buying, more homes for sale means more choices and less pressure to rush. And more room to negotiate too. A house that’s been sitting for a while could have a seller who’s more willing to talk – not just about price, but repairs, closing costs, or even helping buy down your mortgage rate.
That doesn’t mean every seller will play ball. But compared to the frenzy of a few years ago, buyers have more leverage now.
If you’re selling, the right strategy can make all the difference. Buyers have more homes to choose from, so making yours stand out is especially important. That starts with pricing it right from day one, making a great first impression, and working with your agent to highlight what makes your house worth choosing. Buyers are still buying and homes are still selling. The key is making sure yours is positioned to attract the right buyer.
The market hasn’t stopped. It’s just moving at a different pace. And whether you’re buying or selling, your strategy needs to move with it.
Bottom Line
In many places right now, inventory is growing and homes are taking a bit longer to sell. And that’s information that should shape the strategy you use going in.
Whether you’re buying or selling, let’s look at how long homes are taking to sell in your neighborhood, so your offer, or your price, fits today’s market.
Why Most People Are Still Glad They Bought a Home
With everything going on, it’s understandable if you’re wondering if you’d regret buying right now.
Everyday expenses cost more. Mortgage rates are higher than you’d like. And when the economy feels uncertain, taking on a mortgage can feel like a much bigger leap. But here’s some perspective that may help…
Most people who already made that leap would do it again.
According to a recent survey from NerdWallet, the vast majority of recent buyers (74%) were glad they bought their current home. Only a very small 3% of people regret it:
And here’s a big reason why so many people feel it was worth it, even now.
Homeownership Is a Long-Term Play
When you’re deciding whether to buy, it’s easy to focus on what’s happening right now. What’s today’s mortgage rate? Are prices going up or down? Those things matter. But don’t get so caught up in buying in the perfect moment that you miss the bigger picture.
A home isn’t typically something you buy for just a year or two. It’s a longer-term play. And when you zoom out, it all starts to fall into perspective – especially if you look at home prices and equity.
According to data from the Federal Housing Finance Agency (FHFA), home prices nationally have risen 33.4% over just the past five years (see map below):
And that appreciation has helped current homeowners build some serious wealth. Research from Bankrate shows homeowners gained an average of nearly $150,000 in wealth over the past five years as equity steadily rose across 90% of major metro areas.
That’s one of the biggest benefits of homeownership. As you pay down your mortgage and your home appreciates over time, your ownership stake – your equity – can grow.
Now, Zoom Out Even Further
The five-year numbers are impressive. But the numbers get even more dramatic when you look at decades instead of individual market cycles.
FHFA data shows home prices nationally have risen 336% since 1991. Sit with that for a second. Three hundred percent (see map below):
That doesn’t mean prices go up every single year. And it doesn’t mean buying is automatically the right decision for everyone today. You should only buy when the numbers (and the payment) work for you.
What it does show is why trying to perfectly time the market can make you miss the bigger picture.
Over time, homeowners gain a lot of equity. And that equity can eventually become a powerful financial resource. As Freddie Mac explains:
“Your home’s equity is part of your total wealth as a homeowner. If you decide to sell your home, the equity you have built over time will come back to you in the sale. . .
If it’s time to upsize or downsize, you can use that cash for the down payment on your next home.”
Basically, if you can afford to do it, buying a home now could set you up for future moves.
And just in case you’re someone who’s worried about what happens if prices do fall, after you buy, remember: you’re not buying for one year.
Prices can dip. They have before. But historically, they’ve risen far more over the long run. And the longer you own your home, the more time you have to ride out those ups and downs and keep building equity.
Bottom Line
Don’t let today’s uncertainty make you lose sight of what homeownership can do over time. Most homeowners say they’d make the same choice again. And decades of home-price growth help explain why.
If you’re wondering whether buying makes sense for you right now, let’s look at the numbers together – and what owning a home could mean for you in the years ahead.
Renovate or Relocate? What To Know Before You Decide To Age in Place
You’ve spent years making your house feel like home, celebrating milestones, making each room your own, and turning neighbors into friends. As you look ahead to the next chapter of your life, it’s natural to wonder if this is still the place you want to spend it.
Whether you’re leaning toward staying in your house as you get older or moving to a 55+ community, the goal is the same: a home that fits the life you want, with more time for the people and things you love. So, here’s what to consider before you decide.
What It Can Take To Stay Put
Wanting to stay in a house you love and are familiar with makes sense. But most houses need at least some updates to make aging in place easier.
In fact, the Joint Center for Housing Studies of Harvard University (JCHS) finds that fewer than 4% of homes have the basics, like single-floor living, no-step entries, and wide hallways and doorways (see graph below):
That means for most homeowners, staying put means doing a remodel.
The National Association of Home Builders (NAHB) reports more than half of remodelers (56%) take on this kind of work. Some of the most common projects are installing grab bars, curb-less showers (walk-in showers with no ledge to step over), and wider doorways.
Now, that’s not to say you can’t go this route. You most certainly can. But if this is how you’re leaning just know you’d be living with contractor noise and dust until the work gets done. Some people don’t want to live in a construction zone. Not to mention, having to manage the contractors and schedules, etc.
Your Equity Could Pay for Your Next Move
If that sounds like something you’d rather avoid, here’s the good news. The money for your next home may already be sitting in your current one. It’s called equity, which is the difference between what your house is worth and what you still owe on it. After years of mortgage payments and rising home values, it adds up. Jess Catorc, Co-Founder of Carry, explains:
“The way home equity builds and is used changes a lot depending on your stage of life. . . . For older homeowners, decades of mortgage payments and home-value growth can turn equity into a financial cushion.“
When you sell, that cushion can go toward a home that’s ready for this stage of life. No demo required. You just get the keys and it’s all there, ready for you. That means less time on projects and more time for living. And one option you may consider if you’re entertaining a move is a 55+ plus community.
Why 55+ Communities Are Worth a Look
From the homes to the shared spaces to the activity calendar, these communities are planned around this stage of life. And that means everything you need is already rolled into one place. Rocket Mortgage lists some of the biggest perks (see visual below):
Instead of spending time and money to make your house easier to live in, you’d move into a community that’s designed with that in mind from the jump. That frees you up for the good stuff, like a morning walk with a neighbor, a game night down the street, or finally trying the hobby you’ve been putting off.
Bottom Line
Staying and moving can both be good choices. What matters most is finding the place where you’ll feel comfortable and at home for years to come.
If you’d like help weighing the two, let’s connect. We can look at what your house could sell for and what 55+ communities in our area have to offer, so you can decide what feels right for you.
Myth vs. Reality: Does the Fed Control Mortgage Rates?
You’ve probably heard the Federal Reserve (the Fed) is raising rates again. And if you’re planning to buy or sell a house, you may be wondering what that means for you.
With all the headlines, it’s easy to think the Fed sets mortgage rates. That’s actually a common myth. But the Fed’s decisions can still have an impact on them.
So, where does that leave you? The next few months could get a little bumpy. But the Fed is playing the long game. And with the right plan, you can still make a move that works. Let’s break it down.
Why the Fed Is Raising Rates
It all comes back to inflation. With prices rising fast, everything is getting more expensive – and that leaves buyers with less spending power and makes homes cost more to build.
So, the Fed raises its key short-term rate (the Federal Funds Rate) to slow down inflation. And that’s where a lot of people get tripped up.
- MYTH: The Fed controls mortgage rates.
- REALITY: The Fed has an impact on mortgage rates, but it’s only one piece of the puzzle.
As NerdWallet explains:
“The Federal Reserve influences mortgage rates, but doesn’t set them. . . Mortgage rates are influenced by many elements, including the inflation rate, the pace of job creation, and whether the economy is growing or shrinking. The Federal Reserve’s monetary policy is a factor, too . . .”
Here’s the simplest way to explain how it all fits together. Mortgage rates tend to follow something called the 10-year treasury yield. That’s the return investors get for lending money to the government for 10 years. And that yield moves up and down based on what investors expect from inflation and the economy.
Right now, one of the biggest things moving that yield is the conflict in Iran. It’s pushed oil prices higher, which has investors worried about inflation. That’s why any news about the conflict can move mortgage rates. If there’s resolution in Iran, that could take some pressure off inflation and mortgage rates. But the timing is hard to predict.
What the Fed does can move that yield, too. When they hike the Federal Funds Rate to fight inflation, investors pay attention. That can push the 10-year yield up, and mortgage rates usually follow. But once inflation cools, the yield has room to come back down, and mortgage rates can, too. That gives buyers some of their purchasing power back (see graphic below):
Think of it as a little pain today to set up some relief down the road. But how long could that short-term pain last? A lot depends on what the Fed does next.
There’s a Strong Possibility the Fed Will Hike Again This Year
According to CME FedWatch, there’s over an 80% chance the Fed hikes their federal funds rate at least once more before the end of 2026 (see graph below):
Remember, the Fed doesn’t set mortgage rates. But another hike will likely keep upward pressure on them in the short term. So, should you wait it out? Sam Williamson, Senior Economist at First American, says this:
“Over time, firmer Fed action could help steady the bond market and open the door to lower mortgage rates, but only if investors become more confident that inflation is coming under control.“
And there are some early signs that’s starting to happen. Inflation cooled faster than experts expected in August:
- PCE inflation dropped to 3.4%, down from 3.7% in July.
- Core PCE (the Fed’s preferred measure which leaves out food and energy prices) fell to 3%, down from 3.3%.
That’s a step in the right direction, and it’s part of why the odds of a hike at the Fed’s October meeting have come down recently. But inflation’s still above the Fed’s 2% target, and it’s been that way for about 5 years. So, lower rates could still take a while. Your best bet is a plan that works at today’s rates.
How To Make Your Move Work Right Now
While this rate hike cycle isn’t the headline you want to see, it doesn’t mean you have to wait. There are still ways to move, even now.
- If you’re buying: Get pre-approved so you know your real budget. Ask your lender about your options to get the best rate possible. And once you’re under contract, lock your rate so a jump before closing doesn’t raise your payment.
- If you’re selling: Decide what matters most to you – a quick sale or top dollar. Each one can call for a different plan. Price for today’s buyers, whose budgets are smaller with higher rates. And think about offering a rate buydown or other concession. They can do more for a buyer’s budget than a price cut.
Bottom Line
The Fed doesn’t set mortgage rates, but its hikes can keep them higher for a while. The goal is to bring inflation, and eventually rates, down over time. With more hikes likely this year, waiting may not pay off. So, let’s map out a plan that works at today’s rates.
What Higher Mortgage Rates Mean for Home Sellers
Higher mortgage rates don’t just affect buyers. They can change what it takes to sell your house, too.
That’s because today’s buyers are paying close attention to affordability. And when rates rise, even a relatively small change can make a noticeable difference in their monthly payment. So, they’re looking for ways to make the numbers work. And in some markets, new construction is giving them exactly that.
If you’re planning to sell, that doesn’t mean you can’t compete. But it does mean you need to understand what builders are doing to win over buyers – and what options you have, too.
Builders Are Competing on the Monthly Payment
New construction has something interesting going for it right now. While existing-home sales (homes that have previously been lived in) continue to struggle under the weight of higher mortgage rates, new-home sales are holding up a bit better.
In a recent interview, Logan Mohtashami, Chief Economist at HousingWire explains new-home sales are at an 8-month high and are now running around 2019 levels. On the flip side, existing home sales are lagging behind and fall about 1 million home sales short of 2019 levels.
One big reason builders have been able to navigate higher rates differently is incentives. According to Realtor.com, nearly 1 in 5 (18.8%) newly built homes come with some kind of buyer incentive advertised up front:
The most common may surprise you. As the graph shows, many builders are offering reduced rates, sometimes through something called a mortgage rate buydown.
It’s essentially where they pay upfront costs to help buyers get a lower rate, and by extension, a lower monthly payment. It has obvious draws for buyers. For homebuilders, it helps them get their houses sold. So, a lot of builders see it as a win-win. That’s why reduced rates are a part of 13.8% of new home listings.
In some cases, builders are offering rates below 6%, maybe even far below 6%. And that can help buyers shave hundreds off their monthly payment. That’s a big difference to a buyer who are feeling the pinch right now.
So, How Can Sellers Like You Compete?
First, don’t assume a mortgage rate buydown is something only a builder can offer. Sellers can contribute toward a buyer’s rate buydown too, depending on the loan and transaction. Does that mean you should offer one? Or that you have to if you want to compete? Not necessarily.
A buydown is just one possible lever. Depending on your market and the buyer, it may make more sense to negotiate on price, contribute toward your buyer’s closing costs, make repairs, or make sure your house stands out in ways a new build can’t. That’s why working with an agent who knows your local competition matters. Joel Berner, Senior Economist at Realtor.com, says:
“Sellers of existing homes are facing a lot of competition from the new-home space. . . so sellers should highlight the local amenities of their neighborhoods in contrast to the more suburban or exurban communities where many new homes are built.”
A great agent will do this naturally anyways. Knowing what makes your house different and showcasing that in your listing can help your house stand out. And remember, being open to making a few compromises or throwing in some concessions can make a bigger difference for buyers than you may think.
Today’s Market Rewards Sellers Who Adapt
Builders have also been quicker to adjust their prices based on what buyers can actually afford and where demand is. That’s putting pressure on the resale market in some areas. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB), explains:
“. . . existing homeowners now have to do the price discovery that builders have been doing since 2022.”
That’s an important message if you’re hoping to sell.
You don’t automatically need to slash your price or offer a big concession. But you do need to price and market your house based on what buyers can pay today – not what sellers could get a few years ago.
And remember, this varies tremendously by location. New construction represents a much bigger share of the competition in some markets than others, and builder incentives aren’t equally common everywhere. So, lean on an agent to see how big of a factor builders are in your area.
Bottom Line
Higher mortgage rates are making buyers more cost-conscious. Builders know that, and many are responding with reduced rate, closing-cost help, price reductions, and other incentives.
If you’re thinking about selling, let’s look at what buyers are getting from other homes in our area – including new construction – and make sure your house is positioned to compete.
Two Moves That Can Get You Into Your First Home Sooner
For a lot of first-time buyers, owning a home can feel perpetually a few years out of reach. Saving for a down payment takes time, and each year you spend renting can make owning feel further off.
But buying your first home doesn’t have to happen to feel like a far away goal. Two choices you control can bring your first home years closer, even with affordability as tight as it is right now.
How Long Buying Really Takes
First, one quick definition. “Breaking even” is the point where owning has cost you about the same as renting would have over the same period. And after that point, owning starts to cost less than renting. Kara Ng, Senior Economist at Zillow, puts it this way:
“Buyers should think about not just when they can afford to buy, but how long they’d need to stay before owning makes more financial sense than renting.“
So how long does reaching that point usually take? And what are the shortcuts? Let’s do the math.
According to Zillow, it usually takes about 8.5 years to save for a 20% down payment, then roughly 6.2 more years before owning costs the same as renting. Together, that’s just under 15 years. But that math relies on two assumptions: that you’re buying a mid-priced home, and that you’re putting 20% down.
Change either one and your timeline gets shorter. Change both and it can shrink fast. It also varies widely by market, since local prices and rents are different depending on where you live.
A Starter Home Can Get You There Twice as Fast
A starter home usually means a home in the lower third of local prices. They’re often condos, townhomes, or single-family homes a little smaller or older than others in the area.
Choosing one over a mid-priced home can cut your wait down by a lot. And while that might sound obvious, you may not realize just how much it shortens your timeline. Because if you’re buying a more affordable home, you don’t have to save up as much or as long.
Zillow found that nationwide, a starter home takes half the time – about 7.2 years – to save for and come out ahead on, compared with renting (see graph below):
That works out to about 4.6 years to save and 2.6 years to break even. It won’t erase every affordability challenge, but it can take years off the wait. And if you’ve already been saving for a while, it could get you closer to making it a reality.
You Usually Don’t Need To Put 20% Down
You, like many first-time homebuyers, might assume you need a 20% down payment to even consider buying. But a lot of the time, you don’t.
Most first-time buyers don’t put down anywhere near that. The National Association of Realtors shows the median down payment for first-time buyers is 10% (see graph below):
And the minimums go lower still. Some buyers put down as little as 3% on a conventional loan or 3.5% on an FHA loan, and eligible veterans or buyers in certain rural areas can put down nothing at all.
There’s help with the upfront costs of buying, too. Down Payment Resource counts 2,746 assistance programs nationwide, and some are even stackable:
“Some homebuyers can layer multiple sources of assistance to reduce their upfront costs. Layering means combining more than one eligible source of funding as part of your home purchase.”
Put those together – a lower price point, a smaller down payment, and help covering it – and the years you thought you needed start to come down.
Bottom Line
Your first home may not be as far off as it feels. When the numbers make sense for you, buying a starter home and putting down less than 20% can get you there years sooner.
Want to see which starter homes in our area could fit your budget? Let’s connect.
The Mortgage Rate You See Online Isn’t Necessarily the One You’d Get.
You may have seen the headlines saying mortgage rates have climbed to the highest point since January 2025. And if that’s left you reluctant to buy a home, here’s what you need to remember…
That’s not necessarily the number you’d get.
It’s a common misconception that the rate you see in the headlines is the same one you’d get when you buy. The truth is, mortgage rates shift often, and the rate you actually end up with can vary a lot from what you may see or hear about.
What Determines Your Real Rate?
Advertised rates and “real rates” aren’t always the same. That’s because real rates are based on your specific situation, which includes your overall finances and goals. The rates you see in the headlines can’t possibly reflect that.
That’s why only a lender can tell you what your real rate will be. To figure out your unique number, they’ll look at:
- Your credit score: Your credit score includes your payment history (if you’ve made late payments – and how often), credit utilization (are your accounts maxed out, or do you have available credit?), and the length of your credit history (how long have your accounts been open?). For example, someone with an exceptional credit score may qualify for a better rate.
- Your debt-to-income ratio (DTI): This is calculated by dividing your monthly debt payments by your monthly income before taxes to come up with a percentage. The higher your DTI, the higher your rate could be.
- The down payment size and Loan-to-Value (LTV): Your down payment is the percentage of the home’s price you will put down. The LTV is the percentage of a home’s sales price that equals your mortgage.
- The type and term of loan program options: Your loan officer will walk you through different loan options based on what you qualify for. Mortgage rates can vary between different loan products and programs.
Even after you find a home you love, other things can have an impact too. For example:
- A mortgage rate buydown: This helps you get a lower mortgage rate, and by extension, a lower monthly payment, by paying an upfront cost. Sometimes a seller, builder, or another party may even offer to cover that cost themselves as an incentive for you to buy.
- Seller concessions: Sellers are allowed to pay buyer closing costs according to most loan program guidelines. Seller-paid closing costs can add up to thousands of dollars, which can free up some cash for you to increase your down payment, pay down debt, or make other financial adjustments to try to get a better rate.
There’s a lot that can ultimately have an impact on your actual rate.
Your First Step? Getting Pre-Approved.
If you want to know if your number could be higher or lower than the headlines on social, you need to talk to an expert. A simple conversation with a loan officer can help you determine when you’ll be ready to buy, how much you can borrow, and of course, what your real rate will be.
Your lender may recommend a pre-qualification and pre-approval:
- Pre-qualification is a general estimate of what you might be able to borrow based on self-reported information.
- On the flip side, pre-approval is actually a conditional commitment from a lender based on verified information.
Just know that, of the two, the pre-approval process gives you a more accurate picture of your options than pre-qualification. Bankrate gives a quick comparison so you can see why:
How To Get Ready for the Conversation
Ask your lender what documents you’ll need to gather for that conversation. And keep these questions in your pocket too. They’re good things to go over when you talk:
- What will I gain or lose by waiting to buy a home for 3, 6, or 12 months?
- Will I get any tax advantages by buying a home – and what are they?
- What’s the benefit of buying a home and starting to build equity now versus waiting? And how does that impact my finances in the long run?
- How will rate changes in either direction affect me?
Once you find out your rate, maybe you can buy now. Or maybe you still need to wait. But at least you’d know your options and can make an informed decision.
Bottom Line
Headlines and social media make today’s rates sound high. But you have to remember, the rate you’re seeing online and your actual rate could be different. The only way to know what your rate could be is to talk to a trusted lender.
With the right help, you can find out what your real rate is – and where it can take you.
Why So Many Sellers Are Cutting Their Price Right Now
Price cuts are turning up everywhere right now, and they read very differently depending on which side of the deal you’re on.
Sellers tend to worry a cut means walking away with less than they hoped. Sometimes that’s true, but more often it just means the market moved faster than the listing did.
Buyers, for their part, often assume a cut means something’s wrong with the house. Most of the time, that’s not it.
This is what’s actually driving all those price cuts, and why it matters no matter which side of the deal you’re on.
42% of Homes for Sale Are Now Carrying a Price Cut
According to HousingWire Data, the share of sellers cutting their asking price has climbed every month for 7 straight months (see chart below):
Today, more than 4 in 10 active listings have had at least 1 price cut, and the typical seller is cutting about $17,560 off their original number.
Here’s why that’s happening. With rates still elevated and more homes to choose from, buyers can afford to wait for the right number. So, sellers who don’t start there often end up adjusting anyway.
What does that mean for you?
- If you’re selling, this isn’t a red flag. But it is a sign that pricing it right from day 1 is your best bet. Just know that the market’s been shifting fast enough this year that sometimes even a well-priced house can fall behind within a matter of weeks. If that happens to you, dropping your price to catch up to where pricing actually stands today tends to bring in more buyers and helps you sell closer to true market value.
- If you’re buying, it’s easy to assume a price cut means something’s wrong with the house. But with cuts happening on more than 4 in 10 homes right now, the reality is sellers are just catching up to where the market already is. And with affordability still tight, that’s exactly the kind of opening you need to get a better deal.
Why Sellers Are Adjusting Faster than Before
HousingWire Data also shows list prices are trending down nationally. That’s often a sign sellers are pricing more realistically from the start instead of listing high and getting stuck cutting later. List prices have fallen about $26,000 from last year’s peak.
Some of that decline is seasonal, since list prices typically soften each winter before rebounding in the spring. So, expect asking prices to keep drifting a little lower before turning back around (see chart below):
Jake Krimmel, Senior Economist at Realtor.com, explains:
“That is good news for buyers, who are seeing lower asking prices and more room to negotiate, but it is also good news for sellers: Pricing to today’s demand is helping homes move and keeping more transactions alive in a high-rate environment.”
Translation – with rates still elevated, buyers can only stretch so far. Sellers who meet them where they are instead of holding out for unrealistic prices are the ones actually getting to closing. And doing that up front is always better than chasing the market later.
Buyers, You’ve Got Room To Negotiate Again
At the same time, Redfin data shows sellers now outnumber buyers by about 58%, the widest gap on record (see chart below):
That changes the power dynamics of the market – and impacts how homeowners should price their house. Nationally, about 7 in 10 markets now favor buyers or are trending that way.
- For sellers, that means standing out matters as much as pricing. With more homes to choose from, buyers are comparing you directly against the competition. So, a little flexibility, like covering closing costs or being open on timing, can be what gets your house picked over another.
- For buyers, it means more room to ask for a lower price, help with closing costs, repairs after inspection, or some combination of all 3. That’s especially true for homes that have already sat for weeks, where sellers are often the most willing to talk.
Bottom Line
Price cuts are a normal part of today’s housing market, and both buyers and sellers can use them to their advantage. Let’s look at what’s actually happening with prices in your neighborhood, so you know exactly where you stand before you list or make an offer.
