Buying A House? How Inflation Affects You

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( This article originally appeared on NextMove, the weekly housing market newsletter. Subscribe using the box below. )

Inflation, the highest in decades, was showing its ugly face everywhere. But my neighborhood Italian shop isn't all about driving up the price of pasta. If you are considering buying a home soon, this will affect you in more than one way.

This is Jon Reed with NextAdvisor. Next week, November CPI, which measures price changes for certain goods and services, will be released and will be able to show the full range. That helps determine how to proceed with the Federal Reserve, which could significantly slow the economy – and possibly even cause a recession.

When considering a home purchase, the relationship between mortgage rates and inflation is important. Mortgage rates have doubled this year to 7%, significantly increasing the cost of buying a home. They fell slightly in October as reports showed inflation starting to slow.

If next week's data shows signs of slowing further, mortgage rates could fall further, experts say. If your New Year's resolution is to own a home in 2023, that's good news. But we can see otherwise.

What can you do? If you've read my newsletter, the answer will sound familiar: buy the home you want for a price you can afford.

Here are some ways to ensure you get a stable mortgage rate during these uncertain times.

Shopping trip. Don't just go with the first lender you hear about. Get credit estimates from several lenders, preferably on the same day (or at least closer to that day) and on similar terms. Compare prices and APR - shows the total cost, including the total cost.

Stay within your budget. Give yourself enough cushion to cover the monthly payments. There's nothing scarier than buying a house and losing your job or watching your income drop and not being able to make payments. So don't buy beyond what you have to do. Start with the monthly payments you can afford and work from there to see how much housing you can afford.

Don't rush into buying a house. Sure, you'll get headlines as interest rates start to drop, but the truth is you can buy a home in any market if your finances are in order. Don't just try to make it happen based on what's happening in the market.