If you’ve been sitting on the sidelines, waiting for mortgage rates to drop back below 4% before making a move, it’s time for a reality check. While we all loved the historically low rates of 2020 and 2021, those numbers were driven by extraordinary global circumstances, not typical market trends. And expecting them to return any time soon could lead to missed opportunities that may cost you far more in the long run.

During the height of the pandemic, global economic uncertainty prompted aggressive action from the Federal Reserve, which helped drive mortgage rates to record lows. In January 2021, the 30-year fixed rate bottomed out at 2.65%, the lowest in Freddie Mac’s recorded history, which dates back to 1971. But that wasn’t a normal market. It was a response to an emergency.

Looking at the big picture, the average 30-year mortgage rate over the last 60+ years has hovered around 7.74%. Even today’s rates, currently in the mid 6% range, are below that historical average. In other words, we’re not in a high-rate environment; we’re back in a normal one.

The danger in holding out for rates to drop back to those pandemic lows is that the market isn’t standing still. While you’re waiting, home values continue to rise due to ongoing appreciation, and every mortgage payment you’re not making is equity you’re not building. Between market appreciation and amortization (the reduction of loan principal with each payment), today’s buyers are building thousands of dollars in equity every year.

Let’s say home prices rise by just 5% annually, a fairly conservative estimate based on recent years. A $400,000 home could cost $420,000 or more just a year from now. That extra $20,000 increase easily outweighs any potential savings from a slightly lower mortgage rate. And if rates do dip slightly, competition will likely surge leading to bidding wars and driving prices up even more.

So, whether you’re a first-time buyer or looking to move up, the smarter question isn’t "When will rates drop?" …it’s "What will waiting cost me?"

Today’s market offers opportunities, but they won’t last forever. By acting now, you can start building equity, take advantage of current rates while they’re still below the historical norm, and avoid the risk of rising prices and tighter competition. The bottom line: Don’t let yesterday’s rates stop you from building tomorrow’s wealth.

"What if your next home came with built-in income? Discover how living in one unit and renting out the others could slash your housing costs and build your wealth at the same time."

When most people think about buying a home, they picture a single-family house. But there’s another option that could make homeownership more affordable and help you build wealth faster, buying a small multi-unit property.

FHA, VA, and conventional lenders allow qualified buyers to purchase up to a four-unit property if they live in one of the units. That means you could buy a duplex, triplex, or fourplex, move into one unit, and rent out the others. The rental income from your tenants can help offset your monthly mortgage payment, often making your housing cost less than if you bought a single-family home.

This can be a game-changer because of:

• Lower monthly cost: Rental income helps cover your mortgage, taxes, and insurance.
• Forced savings: Part of every payment reduces your loan balance (amortization).
• Rising values: If the property appreciates over time, you build equity on the entire building, not just your unit.
• Future investment potential: You could eventually buy another owner-occupied multi-unit property and keep the first one as a full-time rental. Over time, this can grow into a valuable real estate portfolio.
• Flexibility: Later, you might choose to tap into your equity to purchase a single-family home while keeping your rental properties as income-producing assets.

Not every neighborhood has multi-unit properties for sale, so you may need to broaden your search. And while you don’t have to be a professional landlord to start, you should be comfortable with the idea of managing tenants or hiring a property manager.

If you’re open to living in one unit and renting out the rest, this strategy, often called "house hacking, can be a smart way to make homeownership more affordable and build wealth at the same time.

Example: How Rental Income Can Lower Your Housing Cost

Let’s say you buy a duplex for $450,000 using an FHA loan with 3.5% down.

• Your monthly mortgage payment (including taxes & insurance) might be around $4,287.
• If you can rent one unit for $2,500.
• Your out-of-pocket cost is $1,800 a month to own the property and live in one side.

Instead of paying full price for a single-family home, your tenants help pay the bulk of the bill while you’re building equity and benefiting from appreciation on the entire property. Tax advantages to the rental unit includes deducting maintenance and depreciation.

(Numbers are for illustration only; actual costs and rents will vary by property, location, and market conditions.)

If you’d like to explore multi-unit properties in our area and see how the numbers might work for you, let’s talk! You can also download our Rental Income Properties.