Interest Rates- OVERRATED AND OVERHYPED

The media often exaggerates the impact of high interest rates on first-time homebuyers, but there are five reasons why it shouldn't deter you:

1. Renting has its downsides: When you rent, you essentially pay a 100% interest rate with no tax benefits. Owning a home, on the other hand, offers tax advantages like deducting mortgage interest from your taxable income, resulting in lower monthly mortgage payments. This is an aspect the media tends to overlook.

2. Time works in your favor: The average homeowner lives in their home for about 13 years. Over this period, interest rates are likely to fluctuate, often becoming lower. This presents an opportunity for a cost-saving refinance, benefiting both short-term and long-term finances. If it's your first home, you'll likely outgrow it within five years anyway.

3. Higher rates can mean better deals: Purchasing a home when interest rates are higher can actually work in your favor. The money saved through a discounted purchase price (e.g., saving $20,000-$60,000) outweighs the slightly higher monthly payments. This approach has been instrumental in the wealth creation of many millionaires, as owning a home offers financial benefits that renting does not.

4. The resurgence of 3-2-1 buydowns: With the market slightly down from its all-time highs, the 3-2-1 buydown option has resurfaced. This allows you to lower your interest rate by 3% in the first year, 2% in the second year, and 1% in the third year. The best part is that if rates drop further and you refinance for free, you receive the difference in payment because the seller covered this option for you.

5. Adjusting to a higher payment is advantageous: Familiarizing yourself with higher mortgage payments can actually be beneficial. When you refinance to a lower payment in the future, you save hundreds of dollars each month. By continuing to make the original monthly payment, you can reduce the loan term and increase your net worth. I recently demonstrated this strategy to a client, and their net worth grew by over $120,000 in just five years.

Although homeownership may seem daunting, I'm here to guide you through every step of the process and provide ongoing advice for years after you purchase your first home.