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Cost-Saving Options For Black Americans To Consider As Mortgage Rates Exceed 7%

Higher mortgage rates may prompt potential homebuyers to decide whether to buy now or act later.

Bad news, prospective home buyers: mortgage rates have eclipsed 7% for the first time in 2024.

Based on housing finance giant Freddie Mac, the average 30-year fixed-rate mortgage was 7.10% on April 18, 2024, up from 6.88% the previous week. And it was much higher than  6.39% at the same time last year.

“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” Freddie Mac Chief Economist Sam Khater said in a news release.

He added, “It remains unclear how many home buyers can withstand increasing rates in the future.”

The most recent jump on the 30-year mortgage — the most commonly used by homebuyers nationwide — has hit its highest point since December 2023, per Freddie Mac data. Rising mortgage rates, of course, translate into higher borrowing costs, making home affordability more difficult for buyers.

The current conditions may indeed have some prospective buyers questioning whether to buy now before rates climb higher or wait to see if they fall. While experts don’t provide a definitive answer, they say a decision may simply be driven by a person’s financial position and whether buying now works for them budget-wise.

William Michael Cunningham, an economist and owner of Creative Investment Research, says that though the 30-year rate has increased, it is still much lower than it was in October 2023, when it was about 7.8%.

He says that means the monthly costs for today’s buyer on a $250,000 mortgage with a $10,000 down payment is $1,728 at 7.8%, as opposed to $1,613 on a 7.1 % mortgage.  He says the difference would save a buyer over $41,300 over the life of the mortgage in payment and interest costs. “That’s four times the amount of the down payment than you placed on the home that you’re buying, giving you more money to buy another house if you decide to do so.”

He says another cost-saving option Black homebuyers should consider is energy-efficient mortgages.

With rates likely to continue rising, now might be a good time to consider options to help offset those costs. This report offers some ways to save money and restrain rising mortgage rates.