5 Big Myths About Buying a Home When Interest Rates Are High
- Gigi Pendleton
- Jan 6
- 4 min read
If you’ve been thinking about buying a home, you’ve probably asked yourself:
👉 “Should I wait for mortgage rates to drop… or should I buy now?”
In this post, we’re going to look at 5 big myths about buying a home when interest rates are high and what’s actually true in today’s market.
It’s the #1 question I’m hearing right now. And here’s the honest truth:
It’s not just about interest rates.
It’s about:
timing
competition
price
equity
and—most importantly—your real life
There’s also a lot of confusing (and sometimes flat-out wrong) advice floating around online, so let’s clear up a few of the biggest myths I see buyers wrestling with every day.
💡 Myth #1: “When the Fed cuts rates, mortgage rates automatically fall” Sounds logical… but it’s not how things really work.
The Fed controls short-term rates, like:
credit cards
some bank lending
Mortgage rates are influenced much more by:
the 10-Year Treasury yield
inflation expectations
bond-market demand
overall economic outlook
That’s why we sometimes see:
Fed cuts ➜ mortgage rates rise
Fed hikes ➜ mortgage rates fall
It’s not an on/off switch. It’s more of a “complicated relationship status.”
💡 Myth #2: “High rates mean it’s a bad time to buy” Not necessarily.
Higher rates often mean less competition, which can translate into:
✔️ more negotiating power✔️ price improvements✔️ seller credits and rate buydowns✔️ fewer bidding wars
When rates fall, guess what comes racing back first?
Competition.
Suddenly you’re seeing:
multiple offers
escalation clauses
appraisal gaps
buyers paying over asking price
Some buyers who “wait for rates” end up paying more for the very same house.
💡 Myth #3: “If I wait for rates to fall, I’ll save money” Maybe… but not automatically.
Many buyers who wait wind up paying:
more for the same home
higher property taxes because values climbed
more because of competitive bidding
Meanwhile, buyers who purchased earlier:
✔️ already built equity✔️ already locked in their purchase price✔️ can refinance later if/when rates improve
You don’t marry the rate — you date it. You marry the house and the price.
💡 Myth #4: “You need 20% down” You definitely don’t.
Plenty of qualified buyers purchase with:
3–5% down conventional loans
3.5% down FHA loans
down-payment assistance programs
seller-paid closing costs
And mortgage insurance isn’t the villain it used to be — it’s simply a tool. For many buyers, it’s what allows them to start building equity now instead of renting longer.
💡 Myth #5: “You can’t buy before you sell” You actually have more options than ever before.
Depending on your situation, strategies may include:
bridge loans
HELOCs
loan recasts
rent-back agreements
delayed possession
contingent contracts (yes, they still exist)
The tools are there. The strategy is what matters.
🧭 So… should you buy now or wait?
Here’s the real answer:
👉 It depends on your life timing, not just market timing.
Buying now can make sense if you:
plan to live there 3–5+ years
found the right home
are comfortable with today’s payment
Waiting can make sense if you:
need time to clean up credit or debt
have major job/income changes coming
simply don’t feel ready yet (that matters)
The worst strategy isn’t buying or waiting.
The worst strategy is… not having a plan.
📝 Free resource to help you decide
Want help thinking it through?
👉 Download my Home Buyer Planning Worksheet here:
💬 Want to talk through your situation?
If you’re in the DFW area and trying to decide whether to buy now or wait, I’m happy to walk through your options with you.
No pressure. No hype. Just clear information so you can make a confident decision.
Sometimes peace of mind is the best first step.
🎥 Full podcast conversation
I also recorded a full discussion with Tony Byrne of Service First Mortgage where we break all this down in detail.
Watch here:
👉 What do you think — buy now or wait? Tell me your take in the comments.
### Frequently Asked Questions About Buying a Home When Interest Rates Are High
**Q: Is it a bad idea to buy a home when interest rates are high?**
A: Not automatically. Higher interest rates often mean less competition, more negotiating power, and better chances of getting seller credits or rate buydowns. The key is whether the payment works for your budget and how long you plan to stay in the home.
**Q: Should I wait for interest rates to drop before buying a house?**
A: It depends on your life timing. Waiting can make sense if you need time to improve your finances or your situation is about to change. But many buyers who wait end up paying more for the same house once prices and competition increase when rates fall.
**Q: How do higher interest rates affect home prices and competition?**
A: Higher rates can cool demand, which sometimes leads to price reductions, fewer bidding wars, and more flexible sellers. When rates drop, more buyers jump in, and competition often pushes prices back up.
**Q: Do I really need 20% down to buy a home?**
A: No. Many buyers use 3–5% down conventional loans, 3.5% down FHA loans, or down payment assistance programs. You may also be able to negotiate seller-paid closing costs. 20% down is great if you have it, but it’s not a requirement for most buyers.
**Q: Can I buy a new home before I sell my current one?**
A: In many cases, yes. Depending on your finances, you may be able to use tools like bridge loans, HELOCs, recasts, rent-back agreements, or delayed possession. The right strategy depends on your specific situation.
**Q: How do I know if it’s better for me to buy now or wait?**
A: Start with your budget, your time horizon (how long you plan to live there), and what’s happening in your life over the next 1–3 years. From there, you can compare today’s payment and price against potential future scenarios. If you’re in DFW, I’m happy to walk through the numbers with you so you can decide with confidence.
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