Mortgage rates went over 7% in November 2022. According to Bankrate’s national survey of large lenders, the average rate for a 30-year mortgage fell to 6.27% in the second week of February 2023. The rates are still much higher than the lows borrowers enjoyed in 2021 (when January was witness to a 2.65% 30-year mortgage in the very first week). But the rates are falling (and where they go, nobody really knows).
Buying a home is a longtime investment. There are strategies you can employ when mortgage rates are falling, when mortgage rates are rising, and when mortgage rates are high. Don’t let the ever changing financial landscape stand in the way of your dream home. Check your finances, shop around, get pre-approved, and shop for less expensive homes when mortgage rates are higher. You will be living your best life in a tropical island dream home (and you can always refinance later on).
Plan for a Rate Hike: When shopping for a home with rising mortgage rates plan your budget accordingly. Mortgage rates may increase dramatically in the months you are shopping for a home, making an offer, and closing on a home. Don’t overspend. Shop for homes that are well within your budget. An unexpected rate hike might make that home that was just within your budget out of reach: include less expensive homes in your search.
Mortgage rates aren’t usually locked until there is a contract to purchase the home. Some lenders will offer a rate lock when getting pre-approved (see below).
Mortgage Rate Lock: When getting pre-approved for a mortgage, choose a lender that offers a rate lock. It simply means that a lender will lock in your mortgage rate for a period of time while you shop for a home (typically 45-90 days). This will be of benefit to you if you are able to find and close on a home in the given time frame when rates continue to rise.
Refinance in the Future: Don’t walk away from the perfect home just because mortgage rates are high. You can always refinance when the rates go back down. You’ll pay a little more interest up front, but you’ll be living your own best life in the home of your dreams today!
Shop for a Deal: Compare mortgages from several lenders. Find the best deal for your real estate needs from a trusted lender.
Shop for Less Expensive Homes: When partnering with a buyer’s agent you will be advised to create a wants vs. needs list. When mortgage rates are high it’s a good idea to whittle down your needs list as much as possible and shop for less expensive homes. You will still be living high on the hog (albeit on a shorter hog) without the additional financial stress that comes from a more expensive home.
Kingfisher Real Estate associates are the most well respected group in today’s marketplace serving Captiva Island & Sanibel Island. We look forward to helping you with all your real estate needs and welcoming you into our community as we continue to rebuild paradise. Contact us today!