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Affordable Homeownership With Rising Rates
8/9/2022 | By Team United
Don’t let higher rates scare you away from buying a home
In a rising rate environment, it can be easy to shy away from buying a home or even buying too quickly before rates rise again. But don’t let the rising rates scare you away just yet. When interest rates are on the rise, the best thing you can do is do your research and be prepared to be flexible.
Staying knowledgeable and asking for expert advice is always a great way to ease the anxiety.
Know your budget
Before you start touring homes, it’s important to know how much you can afford. Reach out to a local lender to get prequalified for your mortgage and set your budget with an expert.
Your Mortgage Advisor will help you determine how much you’re approved for and what your estimated monthly payments will be based on your goals and what financing options match your goals. This will be instrumental in ensuring you don’t get into a situation you can’t afford down the road.
Be prepared to be flexible
If rates increase before you’ve made an offer and locked in your rate, you may have to adjust the amount of house you can afford or your mortgage term. A higher rate means a higher monthly payment, but there are other term offerings that may make more sense and fit your budget.
Keep in touch with your Mortgage Advisor to adjust your budget as needed and avoid getting in over your head. Remember, they’re there to put you into the best situation so you can not only be happy with your new home, but happy financially as well.
Explore different loan options
When rates are on the rise, it may be time to look beyond the common 30-year mortgage.
Adjustable Rate Mortgages (ARM) are especially popular for this type of environment. An ARM has an introductory interest rate that is fixed for a specific period of time, followed by an adjustable interest rate that can increase or decrease over the remaining life of the loan, based on certain market conditions.
If you plan to buy or refinance in the near future or expect rates to be lower after the initial term, an ARM can help keep your monthly payment lower until it’s time to move on from your current mortgage.
Look outside your target area for potentially lower prices
Chances are you know roughly where you’d like your new home to be. If housing prices are above average in that area, it might work to your benefit to be a little flexible with your new location.
Check out what the nearby towns have to offer the locals. You can also look at different housing options such as condos or townhomes where prices may be more affordable.
Bottom line
Focus on when it’s the right time for you to buy a home rather than trying to time it with the market. When interest rates on the rise, chances are housing prices may begin to go down. With a little research, flexibility, and guidance from your expert Mortgage Advisor, you can buy a home with confidence.
To get started, reach out to a Mortgage Advisor near you today. Our experts are ready to answer your questions and guide you through the process from start to finish.
