How can higher interest rates impact my home-buying plans, and what strategies can help?
Rising interest rates continue to be a hot topic, especially for people who are patiently waiting to purchase their next home. High interest rates can significantly increase your monthly mortgage payments and even reduce the amount you can borrow, so it’s worth paying attention to the market. However, as daunting as today’s interest rates may seem, there are some ways to mitigate the impact they have on your ability to buy property.
Increase your down payment. Putting more money down reduces the total loan amount, lowers your monthly payment, and can help you qualify for better interest rates. Plus, if you put down at least 20%, you may be able to avoid private mortgage insurance altogether.
Consider an adjustable-rate mortgage. An ARM offers a lower initial rate that adjusts after a fixed period. If rates drop or you plan to refinance or move before the adjustment, this option can help you save money.
Explore first-time buyer programs. There are plenty of programs available that offer reduced rates, assistance with down payments, or grants for first-time home buyers to make homeownership more affordable.
Use a piggyback loan. By splitting your mortgage into two loans, you can avoid PMI and potentially secure a lower blended interest rate.
While higher rates certainly create their fair share of challenges, these strategies can help you manage costs and close on a property that’s in your budget. Talk with your loan originator to see which options work best for you and your budget.
Sources: Cbsnews.com, Moneywise.com
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
