Make the rate work for you!
Interest rates are nowhere near all time highs but that's irrelevant.
You'll hear people parrot "interest rates are historically 7%, these rates are still low compared to that!". They're missing the point.
As a homebuyer or investor you don't really care about the interest rate, you care about your payment. What happens when interest rates rise, payments go up. This matters for everyone.
So yes, interest rates are still *historically* low if you're looking back 50 years but payments are getting historically high because of increases in interest rates, property tax and also insurance costs going up.
So what do you do? Real estate is still an amazing way to build wealth and not everyone wants to live in an apartment where they have no yard, no garage and also can't conrol their rent cost. I'll outline a few ways we're helping buyers increase their afforability of the payment.
- Your rate is not permanent! If and when interest rates go back down you can always refinance into a lower rate. Typically this makes sense when the rates drop 1% or more. You can also roll the costs into the loan so there are no out of pocket costs.
- Get the seller to buy down your rate! You can pay to buy down the interest rate of a loan either temporarily or permanently. This is rather costly but can make a lot of sense if you're trying to lower you payement. The good news is that the seller can give you credits back to get this done too, so no money out of pocket.
- Put more money down. If you put more down your payment then your payment goes down. Of course this takes more money, but it's not a new strategy and you can apply our other two strategies to make it even better! If you put more than 20% down too you don't have to pay mortgage insurance.
It's important to remember that rates going up slows down lots of buyers. When rates rise it's typically an easier time to get a great deal. Get out there and make aggressive offers with huge rate buydowns included to make it a great deal for you!