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There is no sugarcoating it: This is a terrible time to buy a home.

Mortgage rates for a 30-year fixed rate loan are now hovering above 7%, more than 4 percentage points higher than a year ago. That has slashed a typical buyer’s purchasing power by 14%, according to Black Knight, a mortgage data company.

With fewer people able or interested in buying now, home sales have been falling. Just 16% of people say now is a good time to buy a home, a record low, according to a monthly survey conducted by Fannie Mae in October.

Still, that’s barely made a dent in home prices, which soared to new heights during the pandemic and are now just easing off of all-time highs.

Another thing tamping down sales is stubbornly low inventory of available homes for sale, said Jackie Lafferty, a real estate agent with Baird & Warner Real Estate in Chicago.

“It is something I’ve never seen a combination of, this lack of inventory and higher interest rates,” Lafferty said. “There is no motivation for people to move unless they have to.”

But whether people need to move because of a new job, a divorce, an addition to the family or they simply don’t want to give up after years of trying to buy a home, there are still buyers out there.

“Even if sales slow down, real estate doesn’t stop,” said Lafferty. “People need a place to live.”

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For those who are pressing on, here are a few ways you can take some of the sting out of buying a home.

Take a loan now and refinance later

Buyers taking out a mortgage now are doing so with the hope that within a couple years, rates might meaningfully drop and they can refinance to a lower rate.

“Yes, rates have gone up much farther and faster than anyone expected them to,” said Melissa Cohn, regional vice president at William Raveis Mortgage. “But if you can afford to buy today and want and need to, you shouldn’t let the higher rate environment stop you, knowing that at some point in the next year, two years at the most, rates are likely to be significantly lower.”

The downside: You’ll still have to stomach the higher rate for the time being. There is some risk that interest rates may not fall, or at least not by much. And if mortgage rates don’t go down, you could be stuck with it for a while, said Delyse Berry, CEO and principal broker at Upstate Down in Rhinebeck, New York.

“There could be a decrease in rates in the middle of 2023,” she said. “If that comes to pass, you can do a refinance and secure a lower interest rate and lower payments. But these rates could now be the new cost of doing business.”

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