How Buyers Can Easily Handle Higher Rates

 

Sharing a few easy ways that buyers can mitigate higher interest rates.

If you’re looking to buy a home, you’ve probably noticed how high interest rates are but don’t worry—it is not the end of the world. There are ways to work around interest rates that are a little higher. 

First, don't buy more than you can afford. A home you could have easily afforded last year might not be in your price range anymore. Don’t get discouraged; there are ways around that. For example, if you think your income will increase in the next couple of years, you can opt for a 2-1 buydown. 

2-1 buydowns work by lowering your interest rate for the first two years that you have the loan. For the first year, your rate is reduced by 2%, and for the second year, your rate is reduced by 1%. This allows you to ease into a higher payment. Plus, by the time the two years are up, rates may have fallen, and then you can refinance to a lower rate.

"Interest rates will come back down eventually."

2-1 buydowns require an upfront cost, but don’t stress; your seller might be willing to help you out. Right now, many sellers are struggling to find buyers who are willing to pay their full asking prices. If you offer to pay full price, it’s very likely that your seller will compensate you by paying for your 2-1 buydown through concessions. 

Another thing to consider is that with a 30-year mortgage, you’ll have plenty of time to refinance. What comes up must come down, right? Interest rates may be high right now, but they won’t be this way forever. When they inevitably fall, you can always refinance to a lower rate. 

Finally, you might be able to assume your seller’s mortgage when you purchase a new home. You’ll need to qualify for it, but if you can, you might be able to secure a mortgage with a 3% interest rate. That doesn’t sound half bad, right? 

You need to be as creative as possible when buying in today’s environment. Call or email us if you’d like to talk strategy; we are always willing to help!