by Gary Nelson, Realty Executives of Flagstaff
Rising interest rates and previously skyrocketing home values have put many homes out of reach for buyers in all price ranges.
But there are ways to soften the effect of what a mortgage may cost.
Moving quickly when you are able to do so may be your best strategy. If you find that perfect property, get it. Many buyers have lost their buying power since the beginning of the year with interest rates almost double. So, it may be more beneficial to act quickly to beat losing out or being priced out of that perfect property.
Explore an adjustable-rate mortgage
If you plan on living in your next home for fewer than 5 to 7 years, it pays to speak to your lender about a 5/6 or 7/6 ARM or adjustable rate mortgage. For a far superior interest rate, you will get a loan that does not rate-adjust for 5 to 7 years, adjusts every six months afterward, and you could sell it or refinance before that ever occurs.
Lock it down
Interest rates fluctuate weekly; sometimes daily. Speak to your mortgage adviser about when to lock that interest rate, how long you get to keep that rate and whether you should pay for a longer rate lock.
That sounds like a very flip thing to say, but cash is starting to become king again. Money has been so cheap over the past few years that it made sense to get a loan even if you were able to pay cash for a property. In many markets, however, cash has been used by up to 27% of buyers to win a deal and then refinanced after close of escrow. Cash was great for that; it may be great again to sweeten the pot for a seller who may be caught off guard by current market conditions and is ready to make a deal.
Make an offer
With changing market conditions, many home sellers don’t know what the market value of their home is and are waiting for an offer. A seller’s situation may have changed, and they may be willing to accept less than asking price. You may come to an agreement on your terms. As the old saying goes: “They can’t say ‘Yes’ unless you ask the question.”