As rates have been inching higher, buyers and lenders have been adapting their strategies to help make mortgage payments more manageable..
Today, we are going to provide you a few strategies for getting the best rate and a payment that works for your budget.
#1 - Buy Now
Buy now at the current rate (with less competition, and lower prices), and plan to refinance when rates decrease. An adjustable rate mortgage, also known as ARM, can be a great option if you are considering refinancing in a few years (or few months) when / if rates drop. You can lock into a fixed rate for 3 or 5 years, and refinance before your fixed rate “adjusts”.
#2 - Buy Down Your Interest Rate
There are a few ways you can do this. You can purchase “points” (these are typically 1% of your loan amount), which will decrease your interest rate for the life of the loan. Another option to consider is a 2-1 Buydown. By paying a few points upfront, your interest rate will drop.
#3 - Get Rid of PMI To Lower Your Payment
You don’t have to put down 20% to get rid of your monthly mortgage insurance (PMI) on a conventional loan. One option is to pay a premium upfront, also known as points, to remove the PMI entirely (upfront PMI)
The good news is that last month and this month the rates didn’t increase; however, it’s impossible to know with certainty where home prices or mortgage rates will be in the coming months. Unfortunately, there is no way to time the market, but investing in a home to call yours is always a good option.
Friendly reminder: when the time is right for you to purchase a home, purchase a home. Don’t let scary headlines or peer pressure influence that. Instead, buy a home when you can afford the payments, regardless of interest rates and home prices.
There you have it. You now know some strategies to buy with high rates, you might also be interested in learning other components that are important for YOU to consider before buying. Check out my next video where I will share some other points you need to consider before buying. You will learn the 3 elements that every buyer should know before buying
Want to run the numbers to see what you can afford with our current interest rates, or have other questions about buying? Send us a message, and let’s discuss your dream of homeownership.