Can You Buy a Home Without Waiting for Interest Rates to Drop?

 Posted on May 15, 2025 in Real Estate

If you are planning on buying a home, you may have been closely watching mortgage interest rates to see if they could drop. Right now, the interest rate for a 30-year fixed-rate mortgage is 6.76 percent, and for a 15-year fixed-rate mortgage, it is 5.89 percent. These rates are almost double what we saw during the pandemic years. Current housing market data and financial data show little indication of a coming drop in interest rates.

Add to that the fact that tariffs could make building materials considerably more expensive if you consider building a home. With all the uncertainty swirling around us, it could be smart to consider a home-buying strategy that is less about interest rates on your mortgage and more focused on home ownership. If you need assistance in your home-buying quest, you could benefit from speaking to an experienced Waukegan, IL real estate lawyer.  

How Can You Buy a Home Without Worrying About Mortgage Interest Rates?

While it is normal to hope mortgage interest rates will come down before you buy a home, most experts believe that while the rates could decline in the coming months, it will only be marginally. Even if mortgage interest rates do not drop significantly, there are still ways you can make buying a home more affordable. These include:

A Mortgage Rate Buydown

A mortgage rate buydown is a technique used in mortgage financing that provides a lower interest rate for the buyer during the first years of the mortgage. The buyer of the home pays the lender money in exchange for a reduced mortgage interest rate. The structure of this agreement can take different forms. If you choose a 3-2-1 mortgage buydown, you will pay to have lower payments on your mortgage for the first three years.

For example, suppose the 30-year mortgage interest rate is currently 7 percent. You would pay the lender a certain amount of money to have your mortgage interest at 4 percent the first year, 5 percent the second year, 6 percent the third year, and 7 percent from there until the mortgage is paid off. If you only intend to stay in this house for 2-3 years, this could be a good solution to the current interest rates.

An Adjustable-Rate Mortgage

An adjustable-rate mortgage (ARM) has interest rates that periodically reset, starting out as a low fixed interest rate but becoming more expensive if the interest rates fluctuate. ARMs work best for those who plan on selling the home before the initial fixed-rate period ends. The lower introductory rate and lower payments are a draw for homebuyers. Unfortunately, there is also a substantial risk that the interest rates could skyrocket once the loan resets.  

This means your mortgage interest and payments could increase significantly. During the 2008 housing crash, ARM interest rates rose dramatically, and home prices fell, creating the perfect housing market storm. ARM loans can be more difficult to qualify for and are more complicated to prepay because adding extra amounts to your monthly payment does not drastically shorten the length of the loan.

 An Assumable Mortgage

If you choose an assumable mortgage, this means you will take over the current owner's existing mortgage with a lower mortgage interest rate. As many as 11 million homes across the United States qualify for this option. Some USDA, VA, and FHA loans may be assumable, as well as conventional mortgages. You must still qualify for the mortgage you want to assume. You could get a much lower interest rate and avoid closing costs, typically between 3-6 percent of the loan amount.  

Contact a North Chicago, IL Real Estate Lawyer

If you are considering buying a home, speaking to a Gurnee, IL real estate attorney from Newland & Newland, LLP can be extremely helpful. Our attorneys are local to the area, have decades of experience between them, and always put their communities and clients first. One attorney has served on the Board of Directors of the Illinois Real Estate Lawyers Association. To schedule a free consultation, call 847-549-0000.