In just the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac surpassed 5%. Although this news may leave you questioning the current timing of your home search, the reality is, timing has never been more crucial. Even though you may be attracted to the idea of putting your plans on hold in the hope that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead and home prices along with it.
If you’re starting the process of buying a home, here are a few things to consider so you can achieve your goals as mortgage rates rise.
How Rising Mortgage Rates Impact You
Mortgage rates play a vital role in your home search. As rates climb, they negatively impact how much you’ll have to pay in your monthly mortgage payment for the same total loan amount, which directly affects how much you can comfortably afford. Here’s a great example of how even a quarter-point increase can have a significant impact on your monthly payment (see chart below):
With interest rates on the rise, you’ve likely seen your budget/purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase sooner before rates increase more. Use that motivation to energize your search and plan your next steps both responsibly and accordingly.
The single best way to prepare for this market is to work with a trusted real estate advisor now. A good agent can connect you with a trusted and motivated lender, help you adjust your search based on your budget compared to the current market, and educate you so you’re ready to act quickly when it’s time for you to make an offer.
Take Away
Serious and qualified buyers should view rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your home even before rates climb higher.
Brenden Covington
Trusted Real Estate Advisor
Windermere Real Estate/HLC
13901 NE 175th St, Suite 100 | Woodinville, WA 98072
Cell 206.617.4879 | Email bcovington@windermere.com