Why Waiting for Interest Rates to Drop Might Not Be the Best Decision

It’s a common thought: “I’ll wait for interest rates to drop before I buy a house.” I get it. Interest rates are a huge part of the cost of owning a home. But if you’re basing your decision solely on rates, there’s a risk you could miss out on a great opportunity.

In this post, I’m going to show you why waiting for lower rates might not be the best approach, and why it could cost you more than you think.

Why Interest Rates Aren’t the Whole Picture

Interest rates matter. When they’re low, your monthly payments tend to be lower, which is great for your budget. But here’s the catch: When rates drop, more buyers jump into the market, which leads to higher demand for homes. This puts upward pressure on home prices.

So, while you might save a little on your mortgage payment if rates drop, you could end up paying more for the house itself. Let’s break it down:

If you wait for rates to drop, home prices might rise due to increased demand. You could find yourself paying $30,000 more for the same home. So, even though the rate is lower, you’re paying more for the house. The net savings might not be as big as you think.

Pro Tip:

Don’t just focus on rates. Consider the entire picture: home prices, demand, and the cost of waiting. If the numbers work for your budget now, moving forward might be a smarter choice.

The Hidden Cost of Waiting

The longer you wait, the more you miss out on building equity. Homes tend to appreciate over time, even if the market isn’t as hot as it was in 2020 or 2021. By sitting on the sidelines, you lose the chance to start building wealth through your home’s appreciation.

For example, one of my clients locked in a rate a bit over 7% a while back. They were hesitant at first, but they loved the home. Fast forward to 18 months later, and their home appreciated by $20,000. The people who waited for a “better” deal are still sitting on the sidelines.

Pro Tip:

Even a modest increase in your home’s value can help you build equity. Buying now gets you in the game sooner.

"Perfect" Timing Doesn’t Really Exist

We all want perfect conditions, right? But in real estate, those conditions rarely exist. The truth is, you can always refinance later if rates drop. But you can’t go back and buy a house at last year’s prices.

The best time to buy is when it makes sense for you. If the monthly payment fits your budget, and you love the house, then don’t let waiting for rates to drop keep you from making a move. Plus, there are options like seller concessions or temporary buy-downs to help with costs, even if the rate isn’t as low as you'd like.

Pro Tip:

Instead of waiting for rates to hit the perfect number, focus on the numbers that work for you right now. Explore options like seller help with closing costs to make the deal work for your budget.

FAQ: Should I Wait for Interest Rates to Drop Before Buying?

It’s tempting to wait, but waiting for rates to drop could lead to higher home prices. When rates drop, more buyers enter the market, driving up demand and ultimately raising home prices. If the numbers work for you now, moving forward could save you more in the long run.

FAQ: What Happens If I Wait for Rates to Drop and Prices Go Up?

If you wait for rates to drop, home prices may rise due to increased buyer demand. Even if you save a little on your monthly payment, you might end up paying more for the home. It’s about balancing both the rate and the price to find what works for you.

FAQ: How Can I Make a Home Purchase Work with Current Rates?

There are still plenty of options. You could negotiate with sellers for concessions, get help with closing costs, or even set up a temporary buy-down to ease the initial impact of a higher rate. It’s about being strategic and finding solutions that fit your goals.

Bottom Line: Don’t Wait for "Perfect" Conditions

Waiting for rates to drop or the market to line up perfectly can end up being the most expensive decision you make. The market is always changing. If the numbers make sense for you now, don’t wait for “perfect” conditions—move forward. There will always be an opportunity to refinance later, but you can’t go back in time to buy a house at last year’s prices.

Rebecca Richardson, “The Mortgage Mentor,” is a nationally recognized mortgage advisor based in Charlotte, NC, lending in multiple states across the U.S. With over 20 years of experience, she helps buyers navigate home financing with confidence—whether you're buying your first home, investing, or navigating a major life transition. Rebecca is especially known for her work with veterans, real estate investors, and clients with complex financial needs. As a top-producing loan officer and sought-after educator, she’s a trusted guide for buyers and real estate professionals nationwide.