Buying With Rising Mortgage Rates

Over the course of the last month or so, we have seen a sharp rise in mortgage rates. This move was unexpected and very little people saw a move above 3% likely. Well, as of last week, Freddie Mac stated that the average 30-year fixed mortgage rate inched passed 5% for the first time since 2011. This rise in mortgage rates has raised many questions for potential buyers. While timing is always important in the home buying process, it has never been more important than it is today. With some buyers debating putting their plans on hold waiting for lower mortgage rates, waiting could lead to higher borrowing costs. Mortgage rates are forecast to keep rising this year, so here is how to approach buying with rising mortgage rates.

Rising Mortgage Rates Impact

Mortgage rates play a large role in the search for your new home. When rates go up, they impact a few things in the home buying process. Most importantly, buying with rising mortgage rates leads to a higher monthly payment. This higher payment directly impacts your affordability. Below is an example of  how mortgage rate increases can impact your monthly housing payment.

With mortgage rates already on the rise, this trend looks to continue. While no expert honestly predicted mortgage rates would hit 5% in 2022, they are now revising their expectations higher. Because of the Federal Reserve moving to create a tighter monetary policy to fight inflation, borrowing costs are increasing everywhere. Increasing borrowing costs can lead to losing out on the home you once could afford. In order to continue with buying a home with rising mortgage rates, it is important to move quickly.

Mortgage Rates Pricing People Out

As mortgage rates continue to rise, buyers have seen their purchasing power evaporate. Couple higher borrowing costs with record high housing costs, buyers are getting hit from all angles. Instead of waiting out the higher mortgage rates, it could be used as motivation. Rates look to increase or stay elevated until 2024 at the earliest, so higher mortgage rates could be a sign to move. Instead of delaying plans to buy, today’s mortgage rates could serve as a sign or motivation to purchase a home before rates head towards their 10-year averages. Using that motivation to energize your home buying process could lead to you getting settled in your new house with lower rates.

Buying With Rising Mortgage Rates Conclusion

For serious buyers, there is a lot to take into account. First, buyers should reach out to a trusted real estate professional in order to start their home buying journey. Next, you need to realize that waiting to buy a home could cost you thousands of dollars over the course of the loan. There are motivating factors that should enable buyers to move quickly before they are priced out. Waiting to buy will take you out of affordability levels you would have seen with a lower mortgage rate. Working with a real estate professional to understand the course of actions you should take is the first step. Waiting to buy will cost you over the long run.