Have a Plan for Rising Mortgage Rates

Mortgage interest rates have gone up significantly over the past three months, and the changing market has certainly impacted many buyers. But being financially prepared and planning for current and future market conditions can offset much of the uncertainty that accompanies rising rates. Following are some helpful suggestions as you embark on – or continue – the search for your dream home:

• Be conservative with your money: Make sure your purchase funds are accessible and secure in a low-risk account. In addition to having your planned down payment, you may want to also set aside extra funds to counter the effect that higher rates can have on qualifying loan amounts or monthly mortgage payments.
  

• Be flexible and set boundaries: A few months ago, buyers might have been focused on one price point and location. Today, "if/then" scenarios are more common. Work closely with your real estate agent and mortgage broker to understand exactly how interest rates affect your purchasing power and be ready to adapt. Price, home type, location, and loan type could all be in play.
  

• A tool for financial versatility: A mortgage is often viewed as a near-permanent commitment. In reality it's a vehicle that can help you accomplish a variety of financial goals. The fact is most 30-year mortgages are rarely held for 30 years. Therefore, homebuyers who anticipate moving as their needs change might be comfortable with an adjustable-rate mortgage (ARM), which has a lower interest rate that resets after an initial term – usually 5 or 7 years. Homeowners also have the opportunity to refinance if interest rates come back down.

For more buying and selling tips, or a market analysis of your local area, feel free to reach out anytime.