Mortgage interest rates have skyrocketed roughly +2% since the beginning of this year. Maybe you were already in process of your home search or thought about starting but now with the high interest rates, you’re feeling discouraged. Higher interest rates are reducing prospective buyer’s purchasing power, loan amount. There are those who are saying that the higher interest rates should bring home prices back down. How much exactly? It’s anyone’s guess. But as of this moment, the increase in interest rates have had very little impact to home prices. In fact, in very hot real estate markets where there are numerous cash buyers, it has no impact what so ever on home prices for those market. We’re talking about you Florida. In addition, home inventory is still very low with many markets still only having 2 months worth of supply. If anything the increasing interest rates are creating FOMO (fear of missing out) among buyers. As the Federal Reserve has already said it plans to raise rates a few more times this year and into the next year to attempt to reign in inflation. So what can you do about the higher interest rates? How can you still strategically buy a home?
- 🔒 Lock it in! Find out if your lender can lock a rate for you and what their terms are. How long can they lock it in for? Does it cost you anything extra? If rates should dip down while you’re locked, can they unlock and re-lock at that lower rate.
- Assuming your lender can lock in a rate, have them monitor the rates daily and let you know when they see a prime opportunity to lock the rate in to let you know and get it done!
- Don’t try to time the market and continue to wait until you see lower rates before starting your home search. It may or may not happen at all. Also, it’s anyone’s guess as to how long it will take to happen days, weeks, months, or even years. During that time the other variability is home prices, they may also continue to just keep going up. Instead of waiting for everything in the universe 🌌 to align, just do it and get started on your home search!
- Consider an ARM loan, or adjustable-rate mortgage. ARM loan rates are a little over 1% lower than a 30 yr fixed. Depending on your situation, an ARM might be a great fit for you. Check out my previous blog post covering ARM loans here and how it can work for you here.
Hopefully, this information helps you on your home search. Good luck house hunters! Ready to take action and or need help? Let me know!