By John Case
You’re right, they’re up. From the looks of things, it appears that they may be so for some time. However, despite the doom and gloom that we see on TV, hear on the radio, or read in the paper or social media, this does not necessarily mean that if you have been looking to purchase a home that you are shut out of the market until such time that rates retreat to the levels we have seen for the past couple of years.
Here is a little grounding for you with a long-term perspective. Interest rates have been declining since the early 1980’s. This mean that for many
of you, you have not seen rates increase for 40 years. Without this perspective, any increase that you see in today’s mortgage market will look to be high. Through the past 40 years, the rates we see today are very inexpensive.
In you were to take out a mortgage today, 3 things are likely to happen. First, interest rates may continue to increase. This will make you look like a genius as you took advantage of what may be seen as low rates. If mortgage rates increase, you will have your 30-year commitment to the initial monthly amount. Second, they may go down. If this were to occur, you could refinance your mortgage at the lower rate and take advantage of the lower home payment while families that rent will be subjected to higher lease rates while your mortgage goes lower. Finally, if rates stay steady, it is likely over time that your income will increase. That extra money will make your monthly mortgage smaller over time as a percentage of your income.
I had a client that looked for a home for 3 years. During this time, they continued to walk away from perfectly acceptable homes waiting for either price to go down or for interest rates to reduce. They had the income for the homes at the current prices but were always looking for ‘a deal’, while people were purchasing homes at incredible rates all around them. 3 years later, they continued to not act, waiting for the prices and rates to reduce. The home they were looking at are now a quarter of a million dollar more expensive and the rates to purchase are just a bit higher. At the same time, the rent they are paying in the home they are still in has increased by $700 a month.
Finally, deferring the decision (in many cases is inevitable) to buy or purchase a home will ALWAYS (capitals intended) cost you money, forcing you to live in a home that no longer meets your needs, and generally reduces your standard of living.
Major purchases in difficult times are always harder to do but once made, allow you to live in a better state of mind, eventually making things in your life more pleasant. If you have any questions on this or wish to talk about this, feel free to contact your favorite Stanberry agent at 512.327.9310. We look forward to speaking with you about your real estate goals.