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The real estate market is booming. More homes are being put on the market! I am seeing a sudden shift from a seller’s market to empowering the buyers. This is not the time to opt out because of rates.
Here are some reasons why.
Interest rates are still low. Historically interest rates are still very low. Ask your parents what interest rate they had and I could almost guess it was in the double digits. My first home was above 7% and hence I choose an ARM (adjustable rate mortgage) that outperformed any fixed rate for nearly a decade. It’s all about working with the right lender to be strategic in this market.
Though they are rising. If you decide to wait, undoubtedly your rate will be higher. The Federal Reserve Board is anticipating six more rate hikes from now until the end of 2022. I am seeing buyers opting out thus more opportunity for those that are staying in this market. Also, I am seeing buyers now finding their dream homes without escalating crazy high. Getting a home now vs end of the year may ultimately keep your mortgage payment lower -even a one percent difference can cost you hundreds of dollars more a month.
That being said, even if you have a high interest rate, you don't have to be locked into this rate for the full thirty-years. Building an advisory relationship with the right lender will advise you when rates drop and it makes sense to refinance. Some of you may decide to take cash-out to do improvements to your home or buy another property in the future.
Not only that, but you can use the extra cash to buy a new car, or even help you pay off some debt*. If you have children to send to college, you may use some of this money to help them get a head start in life. Again, having the right advisor will weigh the pros and cons.
So, what does this mean for you?
If you are trying to decide whether you should buy a home right now or not, here are some things to consider.
Most people don't buy a home for the rest of their lives. Though it used to be normal to buy a home and stay in it until you no longer can't, this is not the normal anymore. In fact, nationally most people as of 2022 are living in their homes between 10-13 yrs. However, this is market based and for the Pacific Northwest, the average has been closer to 8 yrs. Most folks are selling, taking the equity to move up or they are taking cash-out of their primary to purchase more properties in order to build wealth.
If the mortgage feels high, keep in mind you might be able to still afford it. The lender ensures you qualify for this payment. In this market, stretching could be a great wealth builder.
You should always think about the value of a home. You may have equity in your home sooner than expected. In some instances, you may get the home for less than it is worth, so you already have equity. If home values continue to rise, you may also get equity in your home in the next few months! As you pay off your mortgage, your equity will continue to rise.
What can you do if you are ready to get started?
If you are serious about buying a home in this market, it is vital to get pre-approved and determine what you qualify for and what your best path is before you get out there looking with a real estate agent. This is a very emotional purchase so be in contact with us today to see how we can help you on your path to home ownership!
The information provided is my opinion and not necessarily the views of Evergreen Home Loans
