High interest rates = lower buying power- but that’s not the whole picture

Higher mortgage interest rates have been a hot topic in the news for quite some time now. Rates started creeping up in April of 2022 and have continued to rise, but have failed to creep up to historical highs, which were over 18% in the early 80’s. A lot has changed since then, including overall home affordability, but here are some key points you may be missing if your focus is on interest rates alone.

• Home inventory is up. That means that instead of your offer being one of many competing offers for the same house, you may be the only one. Homes are sitting on the market longer, which gives buyers an opportunity to negotiate repairs or other concessions with sellers. Many buyers who purchased in the crazy pandemic market paid significantly above asking price and got little to nothing in terms of concessions or repairs. Not to mention the low odds of even getting an offer accepted.
• If you are currently renting, your interest rate is 100%. You won’t see a return on any of that money. If you were to purchase, you would build equity as home values rise, even if rates are a bit high. If you’re interested in comparing hard numbers based on your current rent amount, please reach out!
• If you can afford to buy now, you can refinance later if rates drop. If you try to wait for the rates to drop first, you will be competing with a lot more buyers in the market.
• If you have extra cash on hand, you can also pay up front to lower your interest rate. It’s commonly referred to a “buy down”.

The “right” time to buy varies for everyone, but if high interest rates are of top concern, reach out to me and I’d be happy to walk you through some options and scenarios with no pressure or obligation. I’m here to help and I would love to earn your business.