Interest rates are up, and everybody is talking about it. The average 30-year fixed mortgage was 7.18 percent in Freddie Mac's survey released November 5, down a little from 7.24 percent the week before, but up from 6.22 percent a year ago. A lot of buyers are sitting on the sidelines waiting for rates to come back down. I understand why. But waiting can cost you more than buying, and here is why.First, there is less competition right now. When rates were near 3 percent, every decent home in Oakland and Hayward had ten offers, buyers were waiving inspections, and prices were getting bid up past asking. That is not the market we are in today. Fewer buyers are bidding, homes are sitting a little longer, and you actually have time to think. You can tour a home twice, get an inspection, and write an offer with terms that protect you instead of stripping them all away just to win.Second, sellers are negotiating again. In a slower market, sellers are open to price cuts, credits toward your closing costs, and even rate buydowns that lower your payment for the first year or two. Those are real dollars back in your pocket. When the market heats up again, that help disappears overnight.Third, your rate is not permanent, but your price is. If rates fall next year, some homeowners may be able to refinance into a lower rate, depending on eligibility, costs, and approval — ask a qualified lender whether that could apply to you. What you cannot do is go back and buy the same house at today's price. Every time rates have dropped, the buyers who were waiting all came back at once, competition came back with them, and prices went up. Waiting for a lower rate often means paying a higher price.Fourth, rent is still 100 percent interest. Every month you wait, that rent money is gone for good. A mortgage payment builds equity in a home you own, month after month. You are not throwing the money away, you are putting it into something your family owns.Fifth, shop the monthly payment, not the rate. A slightly higher rate on a home that costs less can mean a lower monthly payment than a lower rate on a home that costs more. That is why getting preapproved matters so much. Once you know your real number, mortgage, taxes, insurance, and HOA dues if it is a condo, you can shop with confidence instead of guessing. Your rate will depend on your credit and your loan, so a lender's quote is what counts.So what should you do now? Get preapproved so you know your real number, not a guess. Pick two or three neighborhoods in Oakland or Hayward that fit your family's life, and tour them in person. And look at new construction too. California voters just passed Prop 37, which could help middle income families buy newly constructed homes with loans covering up to 17 percent of the purchase price. The details are still coming out, but it is one more reason to keep new homes on your list.Rates are up, and nobody loves paying more interest. Some buyers choose to buy while they have room to negotiate, and later explore refinancing if rates fall and it makes sense for them — talk with a qualified mortgage or financial professional about your own situation. If you have been waiting for the perfect time, this might be it. Questions about buying in Oakland or Hayward? Ask me, I help families from first time buyers to seasoned buyers.
