If buying a home is on your agenda in the next year or so, time is of the essence – at least if you want to pay less every month on your mortgage!
You see, the Federal Reserve voted to raise the federal funds interest rate in December, and they’ll actually raise it again THREE more times throughout 2017. While this interest rate won’t majorly affect mortgage rates right away, the markets have already begun to shift slightly and will continue to do so over the next year.
According to The MReport, the average 30-year fixed-rate mortgage rate rose to over 4 percent for the first time in over a year last month, and it’s likely that rate will rise even more by the second quarter.
As Realtor.com’s Jonathan Smoke put it, “Rates will likely stay the same until about March, so buyers considering a purchase in 2017 may want to consider getting into the market now.”
If you choose a variable-rate mortgage or want to refinance with a home equity line of credit, you will see the most immediate impact, with a rate jump as soon as your next rate-reset is due.
And if you’re buying a home for the first time, you can also expect to see a changed market sooner than later. Not only will the rate hikes affect your loan’s mortgage rate, but it will also impact home prices, home sales and other factors that influence the market, meaning it will be harder to find a home a that matches your preferences AND your budget at the same time.
Don’t Shell Out Too Much Cash
Want to avoid the repercussions of the rate hike? Then act quickly to purchase your home. First, go ahead and get prequalified for a loan. If you can find a lender that will allow you to lock in your rate for 30, 60 or even 90 days while you shop around, that’s the best solution. It will give you today’s current low rate, but still let you take your time and find a property that fits your needs.
Other ways you can save include:
- Don’t settle for just any mortgage company – You don’t have to use the mortgage company your best friend recommends, nor do you have to go with the first one you get in contact with. Like with anything you purchase, you can shop around. Compare rates and loan products from different lenders, and make sure you’re choosing the best deal possible for your household.
- Negotiate on pricing and fees – Don’t offer the listing price and leave it at that. Ask your Realtor to negotiate a little. Offer a bit under the seller’s price, and let them counter-offer and haggle a bit. You can even ask them to cover certain fees or make repairs before you close, which will also save you some cash.
- Look in a buyer’s market – Focus your home search on areas where there is a lot of inventory and both new and old construction properties are available. The more options there are, the more competition there is between sellers, and that means they’ll be more willing to negotiate on price and fees. Don’t know where those areas are? We can help!
- Time it right – Luckily, this season is the perfect time for buying. The market heats up as you get closer to summer, as parents are trying to get relocated before the kiddos go back to school in the fall. But around the holidays? Not many families are looking to drop thousands on a home nor do they want move. This can mean a lot more options as far as housing goes, and a lot more wiggle room on price.
- Get help – Don’t try to go at your home purchase on your own. Employing a Realtor to help is the absolute best choice if you want to get a good deal. For one, they know the market and can tell when a home is overpriced (or underpriced), which means they’ll be able to negotiate easily on your behalf. They also know the area well and can point you in the direction of affordable, quality properties that meet all your needs.
Interest rates are going up no matter what, but that doesn’t mean you have to bear the brunt of that increase. Contact The Claus Team today, and we can help you get ahead of the game. We’ll create a personalized property list based on your budget and preferences right away, and we’ll even help you along in the buying process. We want you to get the best home, at the best price possible!