As if the real estate market hasn’t been difficult enough, interest rates on mortgage loans are now rising, creating a whole new set of challenges for home buyers. But the last thing we want is for you to get discouraged. Keep reading for our top tips on how to navigate the rising interest rates and still find a home in the Bozeman area.
There are a handful of lenders who are offering programs that allow you to lock in an interest rate before you are under contract on a property. With more rate hikes on the horizon, this would be a very good idea if you are serious about purchasing a home in the next few months. The terms vary from lender to lender and there are different options for how long you can lock in the rate. Some of these programs even offer the option to “float down” meaning if interest rates drop while you are searching, you can adjust to the lower rate. Depending on the length of your rate lock, there may be fees involved, but when you think about the amount you could save over the life of your loan with a lower interest rate, those fees may be well worth it. If you would like us to refer you to a lender who offers these programs, click here.
No one wants to hear that the amount they can afford has gone down, but it is important that you find out what that new number is. It would be heartbreaking to get an offer accepted on a home only to find out that you no longer qualify to borrow that amount. Contact your lender to find out what your new home budget is, and let your real estate agent know so that you can adjust your home search accordingly. Until you are under contract on a home, it is a good idea to ask your lender to give you an update each week on what you qualify for at that point in time so that you can adjust your home search accordingly.
If you are serious about purchasing a home, you don’t want to put off getting your finances in order with your lender. Rates are changing quickly and could rise from one day to the next. Each day you wait to make a phone call to your lender could cost you more than you realize. If you are ready to get started on the real estate side, visit our Buyers page for more resources.
As rates rise, it can be tempting to seek out loan options that seem to be a better deal upfront. You may have noticed that adjustable-rate mortgages usually offer a lower initial borrowing cost. While this may seem like a good deal at first, these types of mortgages can be a risky move if you plan on keeping the property for more than a few years. An adjustable-rate mortgage means that the interest rate on your loan will be fixed for a period of time, usually a few years. But after that, the interest rate will reset periodically, depending on the terms of your agreement. If interest rates are declining, this can save you money. But, if they increase, you will be subjected to increased mortgage payments.
Interest rates may be rising, but that doesn’t mean the dream of homeownership is out of reach. You can still get into a home this year, even with the current interest-rate climate. If you would like some help finding a home, let us know. We would be happy to help!
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