With the steady rise in interest rates, many buyers are concerned if they should even bother purchasing a new home. I have recently had potential buyers asking if they can buy a house as rates climb.
The short answer? Yes, you can still buy a house with rising interest rates.
Here are some details to be aware of as you make your decision.
While buying a house is always an option, high-interest rates make it more challenging because it can be harder to qualify for a loan. In addition, higher interest rates result in higher monthly mortgage payments. Therefore, if you budgeted for a house based on the rates at the beginning of 2022, you would likely have to re-evaluate.
A potential way to counter this is to check your credit score. The higher your score, the more likely a lender will consider qualifying you for a loan. Conversely, if you have a lower score, take some time to make improvements to help increase it. This is good practice in general, but especially when you are trying to buy a house.
Many people also think they can lock in at a mortgage rate today of around 7% and refinance later. While rates constantly fluctuate, there is no guarantee if or when they will come back down. Refinancing is always an option, but don’t bank on an opportunity like that happening very soon.
If you’re looking for a way to lower your monthly payments while interest rates are higher, consider increasing your down payment. While this isn’t the solution for every financial situation, this is certainly an option if you can afford it.
My last piece of advice is don’t spend all your money to buy a house. Make sure you always have an emergency stash available for “just in case” situations. I’ve seen people drain their savings to afford a higher down payment, but that can be risky.
Bottom line – if you want to buy a house, go for it! Just make sure you’re weighing all your options before making your decision. Regardless if you are looking to buy or sell, I’m always here to help. I can answer any questions and provide advice based on my extensive career in this industry. Reach out anytime!
Give me a call at 717-253-3259 (cellphone) or check out my website at www.karentavenner.com.