Interest rates impact the decision to buy a home. The rates increased last week by roughly .125% according to surveys. They have crept up slightly over the last several months, but despite the rise in interest rates now is still a good time for many homebuyers to buy. Why?
In some markets where MortgageBite clients are, demand will always exceed supply, which means buying now could translate into greater equity in your home, ensuring long-term growth. When interest rates fluctuate, some argue that buying makes more economic sense than renting. For example, a 1% rise in interest rates is the same as losing 10% in buying power. If you could afford a $150,000 home, a 1% increase in rates means you are now looking at $135,000 in buying power.
But the main reasons people purchase a home are to provide a safe place to live, have more space, and have the ability to obtain control over their own home. Waiting to buy could result in compromises that negatively impact families and significantly reduce purchasing power.
Rates are still near all-time lows, so those who are qualified and interested in buying a home should do so; as the lack of inventory will perpetuate in the future. Potential homebuyers should get pre-approved by a reliable lender and work with a full-time realtor that specializes in their desired area. Buyers should also realize that as the real estate market heats up, it might be harder to obtain their desired home in their price range. Buying a less desirable home now could result in gained equity and the ability to purchase a better home in the future.
As many of MortgageBite clients know, the best way to remove the concern of rising rates when looking for a home is to not think of the home as an investment, but as your home. It’s a bonus if you make money off of it.