Do the (new) math!
Anyone who has a child in today’s school system has been introduced to the “new math” concepts, officially known as Common Core. Kids are being taught how to figure out an answer using different approaches.
How is new math different from old math?
Under new math, children are taught abstract, obscure mathematics previously reserved for older students; including set theory, how to count in different number bases, and that these are not “numbers,” but “numerals.”
You’ve probably also seen the videos of someone doing the same math problem using the “old school” method vs. the new math/Common Core process. The old school approach shows the person having so much time left over, they start to make coffee while the “new math teacher goes on and on… (Here’s a quick, fun link!
What does new math have to do with today’s real estate market?
Really, nothing. No matter how you “do the math,” the numbers come out the same. Mortgage interest rates are rising, forcing families to either lower their home purchase price to stay in budget or putting their home purchase on hold – which is the wait-and-see scenario that seems to be prevalent.
Mortgage rate forecast: What is driving mortgage rate change?
“Inflation is absolutely in the driver’s seat, particularly as it pertains to mortgage rates. Until we get some sustained evidence that inflation is beginning to recede, the upward pressure on mortgage rates will remain,” says Odeta Kushi, deputy chief economist at First American Financial Corp.
What do today’s mortgage rates mean for your homebuying plans?
This year’s dramatic surge in mortgage rates has complicated the math for homebuyers. Mortgage costs are significantly higher than they were just a few months ago, often wiping out any savings that would be seen from lower home prices.
Home prices remain near their all-time highs and are still higher than they were at the same point last year, despite some drops from their peaks earlier in the summer.
The most important thing is to do the math and calculate your expected monthly payment and see if that fits your budget. The softening demand for homes could also mean you’re more likely to be able to find a deal or get a seller to agree to concessions, such as paying mortgage points to get you a lower interest rate.
“It’s always a good time to buy a home, if that’s what is important to you. It’s just about doing your research and making good, informed decisions,” says Eileen Derks, head of mortgage at Laurel Road, an online lender owned by KeyBank that specializes in serving healthcare professionals.
Enjoy doing the math any way that works for you!