As the real estate market changes, it’s important to have a running start on your home buying journey.
Here are three things to keep in mind — from mortgage rates to buying power — as you navigate the housing market.
What’s going on with mortgage rates?
As consumers, we have been spoiled with historically low interest rates that held out for an uncommonly long time. As interest rates begin to fluctuate, it is common to feel concern, especially for first-time home buyers.
Understanding the cause and effect behind rate increases can help reduce worry over market changes. Interest rates directly influence a buyer’s buying power. Real estate agents can help you understand what this means and what steps you can take to better prepare for it.
I often advise clients to check with the financing institution with whom they have a working relationship. This institution will already have your financial history and a personal gain in maintaining your business. They are best equipped to help you understand your buying power.
Know your buying power
Increased interest rates will increase mortgage payments, and this ultimately influences how much buying power you have. Knowing your buying power is an important factor when it comes to entering the housing market.
It is especially important to understand what you can afford monthly (in terms of payments) and how much of a down payment you need to get the monthly payments where you need them. Many people would rather look for lower costs vs. having to produce more of a down payment, but it is always good to have options.
Don’t be afraid to shop lenders
I have a working relationship with several lenders, and I encourage my clients to shop around for the best rate when going through the pre-approval process. A home is one of the largest purchases you will ever make, and even though refinancing is an option later down the road, you should feel confident in your purchase and the process of paying it off for the foreseeable future. Plus, it is always in the buyer’s favor to come to the market prepared.