Even though mortgage rates dipped below 5% this past week, they’re still higher than they were just a few short months ago. This has priced some home buyers out of the market, and caused others to take a wait-and-see approach, hoping for rates to drop back down to historically low levels.

It’s understandable why current buyers would want to hope and wait, but it’s impossible to say if rates will ever go back down to the 2% or 3% range, let alone soon. But if they do, it’s not likely to happen in the next few weeks or months, so the decision buyers have to make boils down to whether or not they’re willing to potentially wait years to buy a house.

That said, based upon this Market Watch article, buyers could inadvertently be costing themselves more money by waiting for rates to come down. This is because the “real mortgage rate” has gone negative for the first time in 40 years, according to the chief economist at Angi (a home services company). Simply put, if mortgage rates are currently at 5%, and the inflation rate is at 9%, the realmortgage rate is -4%.

So while some buyers may decide not to buy because rates are “high” relative to where they were a while ago, they’re missing the opportunity to capitalize on the fact that inflation is currently making these rates a better deal.

Of course, this is due to inflation, and inflation isn’t forever. So as the inflation rate comes down, one could argue that having a mortgage at the higher rate (relative to where they were) is not ideal. Unfortunately, nobody can predict how long and at what rate inflation will be high. But it’s probably a safe bet that it’s not easing up in the next few weeks or months, and it could last years.

This doesn’t mean you should run out and buy a house just to take advantage of the current negative real mortgage rate, taking inflation into account. But it’s something to think about — and worth crunching the numbers based upon your own personal situation — if you’ve been weighing whether or not to buy right now.

The Takeaway:

Mortgage rates are higher than they were a short time ago, but that doesn’t mean they aren’t a good deal. Due to inflation, the current mortgage rates are actually negative for the first time in 40 years. If you’ve been putting off buying a house hoping rates will come back down, you may be in for quite a wait, and during that time it could be costing you in ways that are hard to see or quantify without truly analyzing the pros and cons of waiting. Crunch the numbers and see how much sense it makes for you to buy now, based upon your personal situation.

Over the last couple of years, buyers have had to do everything they possibly could to compete. It wasn’t just about price. They also had to come in with as “clean” an offer as possible, which often meant waiving fairly standard contingencies.

In case the term isn’t something you use in day to day life, a contingency is a clause in the contract that is in place to protect the buyer. The most common ones are:

• Loan contingency: If the buyer’s mortgage isn’t approved, they can back out of the contract.
• Appraisal contingency: If the house doesn’t appraise for as much as the buyer is offering, they can cancel the contract.
• Home inspection contingency: If the buyer finds major structural or operational issues with the house, they can request that repairs be made, or cancel the deal if the seller won’t agree to their requests.

Unless you were a cash buyer, it was almost impossible to waive your loan contingency. (Well, you could, but if the loan wasn’t approved you were asking for trouble since you’d technically be on the hook for the amount you offered to pay the seller, or you could get sued or at least lose your deposit.)

And if you were applying for a mortgage, it was difficult to truly waive the appraisal contingency. So only buyers who had the financial ability to make a cash offer could waive those.

However, the home inspection contingency was one that almost any buyer could waive if they wanted to — and many buyers did just that in order to make their offer as appealing as possible, since it was the one contingency they could feasibly waive.

Waiving a home inspection isn’t ideal. It’s understandable that so many people did it because they probably didn’t stand much of a chance at having their offer accepted if they didn’t. But most buyers would prefer having the chance to get an inspection and not only know if there are any problems, but also be able to request they be taken care of, or be able to cancel the contract.

While the market hasn’t entirely shifted to a buyers’ market (and it may or may not), it’s certainly improved in some ways for buyers. There’s a little more inventory, a little less competition, and prices seem to be at least stabilizing in many areas. All of those factors are adding up to giving buyers some breathing room and the ability to avoid waiving their rights to a home inspection as often, according to this Fortune article.

It may not sound like such a big deal to buyers who are hoping for a dream scenario where prices plummet and lower mortgage rates make a comeback, but it is. This is the sign of a more stable market where buyers don’t have to make such quick, rash decisions. So if you’ve been waiting or taking a breather from house hunting to wait until things cooled off, these subtle shifts in the market are a good reason to get back out there and look for a home.

The Takeaway:

Loan, appraisal, and home inspection contingencies are meant to protect you. While it made sense for many buyers to waive them in order to be more competitive in the last couple of years, it wasn’t ideal. In most areas, the market hasn’t shifted to a true buyers’ market. But in many areas, favorable conditions are starting to emerge for buyers, like not having to waive their right to a home inspection.