Rates are up! Should you still buy a house? |
Posted: October 4, 2022 |
After a couple of years of really competitive housing prices, there are signs that things are beginning to settle down. With record-high prices, many people were unable to even consider buying a home. Many people think the housing shortage is an ongoing problem that could make it difficult for finding an affordable home. Another consideration for buying a home is a high mortgage rate, which makes monthly payments expensive. But with higher mortgage rates comes the possibility that demand and competition for home buying could slow down. As the market begins to settle down, now could be a great time to buy a home. Why Wait?It’s largely still a seller’s market, but with rising interest rates, fewer people will be buying homes. The total cost of a mortgage has more factors than just the interest rate. For example, economic pressures are driving up rent, and it’s possible that your new mortgage payment will cost less than your current rental payment—or if it doesn’t cost less now, it will in a year or two when rent goes up but your mortgage stays the same. Also, with fewer people buying homes, sellers may be willing to make concessions in order to sell, giving you a great home below the sale price you’d have to pay in a hotter market. While nothing is guaranteed, it's likely competition will decrease as rates go highe Find the Right LenderFinding the right lender can make all the difference. Depending on the type of mortgage, down payments could be low or even 0%. But making a higher down payment will help lenders offer better rates, and the seller is more likely to accept your offer. The idea is to get a preapproval letter from your lender. Real estate agents benefit by knowing what you can afford and will help you find a suitable property. You also know what you can offer, which speeds up the buying process by keeping you from looking at houses you can’t afford. Buyers Are in ControlNow that things are settling down, it gives buyers more control. Demand is decreasing, and in some locations, the market is beginning to slump. As the saying goes, it’s all about location. In some areas, there are no homes available, while in others there are too many to justify higher costs, which could benefit the buyer. ConsiderationsAlways keep in mind that prices could go up in the coming months or years. This suggests that locking in a rate now will save you more in the future. Cash buyers can especially benefit from a slumping housing market since mortgage prices don’t really affect them. Many people think that their income and credit score are all that go into getting a loan. But debt is also just as important. It’s advisable to consider your entire financial picture now and in the future. Lenders can help you understand ways to qualify for your loan and make an affordable down payment. Focus on your finances. If you’re trying to free up cash, it’s important to get rid of any existing debt. Start with the lowest debt balance and work towards the largest ones. Getting rid of extra debt can improve your credit score allowing you to qualify for better loan options. Once you have your finances in order and have found the right lender, now could be a great time to buy a home.
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