Right now, if you're thinking about buying a home, you're probably also thinking a lot about mortgage rates. And yes, with rates hovering around 7%, it can feel a little scary. (Okay, maybe a lot scary.) So the big question at the top of 2025 is: Is now even a good time to buy? Should I just wait it out and hope rates go down? These are big questions, and you're absolutely right to be considering them carefully. Buying a home is a huge decision, and it's important to feel confident, not confused or pressured.
The Big Question: Buy or Wait?
There's no one-size-fits-all answer, and anyone who tells you definitively to "buy now" or "wait" without knowing your personal situation isn't giving you the full picture. The truth is, the right decision depends on you. Let's break down who might benefit from buying now, and who might be better off waiting.
Who Should Consider Buying a Home Now?
Even with interest rates at 7%, buying a home now can still make sense for certain people. Think about it this way: while mortgage rates are higher than we've seen in recent years, they aren't unprecedented historically. What's more, the housing market in 2025 is presenting some interesting dynamics. Even though rates have increased a bit, there's also more housing inventory available in many markets. More homes on the market can mean less competition and potentially more stable home prices.
Buying a home now could be a smart move if you're financially ready and homeownership aligns with your long-term goals. If you've diligently saved for a down payment, have a comfortable emergency fund, and your income is stable, buying now might be a solid step towards building long-term stability. As Paul Johansen, a real estate broker at The Corcoran Group, said in a CBS News article, if your "finances are solid," now could be the right time. Another reason to consider buying now is if you've found "the one" and you plan to stay for a while. If you've been searching for a while and finally found a home that really fits your needs and you envision yourself living there for many years, locking in your housing costs now could be beneficial.
Even if interest rates fluctuate, your monthly principal and interest payment will be fixed with a fixed-rate mortgage. So if you're renting right now and tired of increases from your landlord, buying could be a good option. Rent prices are also impacted by inflation, and in many areas, rents continue to climb. While mortgage rates are at 7%, locking in a fixed mortgage payment could provide more predictable housing expenses compared to the uncertainty of rising rents year after year.
Remember that with every mortgage payment you make, you're building equity in your home, essentially paying yourself over time. Rent payments, on the other hand, solely benefit your landlord. Homeownership is still a significant way to build wealth over the long term.
Who Should Probably Wait?
On the other hand, waiting might be the more responsible choice in a few situations. It's smart to consider waiting if you're stretching your budget too thin. Affordability is everything, and if current mortgage rates push your potential monthly payments to a point where you'd feel house-poor, it's wise to pause. Ramsey Solutions emphasizes that you shouldn't buy if it isn't affordable. Being "house poor," where most of your income goes to housing costs, can limit your ability to save, invest, and enjoy life.
Waiting might also be a good idea if you're hoping for rates to come down and have some flexibility. Predictions, like those from Fannie Mae, suggest that mortgage rates may ease gradually in late 2025 and 2026 but will remain above 6.5%. If you aren't in a rush to buy and can comfortably continue renting or living in your current situation, waiting for a potential dip in rates could improve your affordability. In the end, if you're worried about your personal finances, waiting might be a better strategy. Economic uncertainty can impact job security and overall financial stability.
"If I were going to be buying real estate right now and I had to take out a mortgage. I have to tell you, I think I would probably wait till about September to do so. I would not be rushing to go ahead and buy right now at a 7% interest rate." - Suze Orman
Questions to Ask Yourself, No Matter What
Regardless of whether you decide to buy now or later, there are questions you should always ask yourself. Beyond just the down payment, are you really ready for all the costs of homeownership? This includes closing costs, property taxes, homeowner's insurance, potential HOA fees, and ongoing maintenance. Use our mortgage calculator to realistically estimate your monthly payments. Plus, you know the saying: Location, location, location. Think deeply about what you need in a location. Think hard about your commute, schools (even if you don't have kids, good school districts impact resale value), access to amenities, and the overall neighborhood vibe.
While you shouldn't buy solely as an investment, understanding the local real estate market is important. Are home prices in the area trending upwards? Is the area desirable? This can impact your home's value over time.
Your Decision = Your Timeline
Deciding whether to buy a house with mortgage rates at 7% is a personal decision. There's no right or wrong answer, only the right answer for you at this moment. Take your time, do your research, be honest about your finances and needs, and don't be afraid to seek advice from trusted financial professionals and real estate experts.
Whether you're currently renting and wondering if homeownership is even within reach, or you're actively house hunting and trying to make sense of it all, we're here to help. We offer round-the-clock support and guidance to help you game plan and truly understand how much home you can comfortably afford. No pressure, just honest advice and expert insights to empower you to make the best decision for your future.
With mortgage rates around 7%, what's your home buying plan?
Buying now, it's the right time for me.
Waiting for rates to drop.
Undecided, still weighing my options
Not planning to buy any time soon