Buying a House with Higher Interest Rates
| Posted in News, Home Loans
You love your home, but you know you’re ready for something different. Maybe that means more square footage, more land, a lake home, or perhaps downsizing. Compared to the last decade, interest rates right now may seem high. Is it worth still searching for a home? Will you regret buying a house now versus waiting for rates to drop? Do you even consider buying a home with these rates? These are some of the most common questions we are hearing from potential homebuyers. Our first response to this is simply the reminder of although rates may seem high, they are still historically low. Between 1980 - 1990, average rates were between 10-18%.
We know you may still be weary and remain hopeful that mortgage rates may drop. Unfortunately, we cannot predict the future, so our advice typically is if you’re ready to buy, don’t wait on mortgage rates to find your dream home.
Should I Buy a House Now or Wait?
The quick answer to this question is, if you find a house you LOVE, go for it! There are so many benefits to purchasing a home, even with current interest rates. Here’s a few:
- Appreciation. Typically, real estate appreciates over time, meaning your home increases in value with time. Buying a house with a high interest rate on your mortgage may seem like a loss, but when appreciation is factored in, you can get a head start by purchasing a home now.
- Refinancing is always an option. Should interest rates drop, NEBAT offers refinancing options, so you can get a lower interest rate and drop your mortgage payment.
- Continue to build equity. If you already own a home, buying your next home helps you to continue to build equity and strengthen your financial profile. If you’re a first-time home buyer, there are several benefits to buying a home versus renting.
- You live in a house you LOVE. This speaks for itself but sometimes paying a little extra on a mortgage payment is worth it.
Mortgage Rate Options
At NEBAT, we are passionate about working alongside you to find the best mortgage option for your family. When it comes to buying a house with high interest rates, it's worth a conversation with a NEBAT lender to learn your options. Whether that means a lower down payment, an adjustable rate mortgage (ARM), or other custom option, we’re here to help.
Fixed Rates: If you suspect that mortgage rates could continue to increase, locking in a fixed rate will keep you at the same interest rate for the lifetime of your mortgage.
Adjustable Rate Mortgages: Take advantage of a lower initial interest rate with an Adjustable Rate Mortgage (ARM). These may be a good option for a short-term investment such as a starter home or during uncertain circumstances such as moving homes for the purpose of a job. Your NEBAT lender can help explain the various components of an ARM.
Custom Loan Terms: Mortgage terms at NEBAT could be 15 or 30 year loans. Your NEBAT lender will meet with you to discuss your mortgage payment goals, what you have saved for a down payment and answer any questions. From there, we’ll suggest a mortgage that will work for your family.
Start Your House Hunt
If you have the itch to house hunt, we encourage you to go for it! We recommend getting your pre-approval letter first, so you know what you can afford. Don’t let today’s interest rates stop you from finding your dream house. Here are a few action items to get you started:
- Determine if you’re ready. This could be a simple list of pros & cons.
- Connect with your NEBAT lender.
- Request your pre-approval letter.
- Connect with a real estate agent.
- Shop around and make a wish list of what you hope for in a home.
