President Trump responds to housing bill
President Trump has cited the housing bill, arguing that low interest rates are the key to improving affordability.
We all know you shouldn’t try to time the market when it comes to investing in the stock market, but experts say that should apply to home purchases as well.
While interest rates on a 30-year fixed mortgage of just under 6.50% may still seem high to many prospective homebuyers, experts say that shouldn’t be the deciding factor in whether or not to buy a home. This is down from a year ago and probably far less than what our parents paid. The average rate since 1971 is just under 8%, according to Freddie Mac.
Interest rates may probably be a little lower this year, but if you find the perfect home you can buy now, you should go for it, housing experts say.
“The key is not to wait for the perfect rate,” said Jeff Dergrahian, chief investment officer and chief economist at LoanDepot, a nonbank consumer mortgage lender. “The message for homebuyers is simple: Focus on finding a home that fits your budget and long-term plans, rather than waiting for the perfect rate.”
Isn’t the mortgage interest rate important when purchasing a home?
While your mortgage interest rate is important in calculating your monthly payments and the total cost of your home over time, experts say it’s just one factor among many.
“Many buyers still want lower interest rates, but it’s important to remember that interest rates are only one part of the affordability equation,” said Bob Johnson, head of origination at NewRes, a mortgage lender and loan servicer. “If interest rates fall significantly, increased demand could put upward pressure on prices in some markets.”
Also, published prices are averages. Experts say potential buyers with good credit can get lower interest rates and better terms.
Lenders use credit scores as one measure to decide whether to approve a loan and the terms, such as interest rates. A high credit score tells lenders that you are at low risk of defaulting on your mortgage. Most conventional mortgages require a minimum credit score of 620 or higher for homebuyer approval, but some first-time homebuyers may be eligible for special government-backed loans with more relaxed approval requirements, Equifax said.
How can Americans improve their credit scores and get the best rates?
The first step is to know your credit score. A quarter of Americans don’t know their FICO score, a survey by credit scoring agency FICO found.
Once you know your credit score, it’s time to make a plan to improve it. Renters often don’t realize that just paying their rent on time can improve their scores, FICO says.
“The path to homeownership begins with understanding your financial readiness,” said Jenelle Dito, vice president of consumer empowerment and partnerships at FICO. “It’s best to start monitoring your score at least six months before you start the process so you have time to make meaningful financial improvements. Actively tracking your financial habits and identifying where there is room for improvement is an effective way to build credit and secure better terms with lenders.”
Once you’ve built up your credit score, it’s time to start looking for the best rate. Experts say multiple mortgage-related credit inquiries within a short period of time (usually 45 days) are treated as a single inquiry when calculating scores.
“There are little to no negative consequences to shopping around, and even a small difference in interest rates can translate into tens of thousands of dollars over the life of the loan, so it’s well worth the effort,” Dito said.
Aren’t house prices still rising?
Experts say home prices are still rising, which could exacerbate affordability problems, but the pace of rise is slowing.
“Home purchase prices have generally been on the rise in recent years, but the pace of increase appears to be slowing,” Johnson said.
The median purchase price for first-time buyers rose by about 6% from 2024 to 2025, compared to about 11% from 2023 to 2024, according to a June study by Newrez. Annual purchase price growth for repeat homebuyers has been cut in half, slowing from about 10% to 5%.
“Affordability remains a challenge, but the market is showing signs of becoming more predictable,” Johnson said. “Buyers may now have more opportunity to evaluate their options and make thoughtful decisions than they did when prices were rising rapidly.”
Buyers should remember that they can always refinance if interest rates drop.
“Even if you find a home that fits your current budget, it still makes sense to move forward with the purchase, especially given that mortgage rates may eventually fall and there may be an opportunity to refinance to a lower payment later,” Delgrahian said. “Think of this less as trying to time the market perfectly and more as making sure your home, payments, and long-term plans all fit together. Every market is different, but a home is still one of the great long-term assets you can own.”
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Contact her at mjlee@usatoday.com and subscribe to the free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning..
