Here’s how buyers and sellers can combat rising mortgage rates.
It’s official: The Federal Reserve has announced that they are raising interest rates. This means that the cost of borrowing money will likely increase. If you’d like to buy a home but haven’t pulled the trigger yet, I want to talk about what you can do to beat rising interest rates.
First, if you aren’t already, get pre-approved. If you already are pre-approved, keep in touch with your lender to make sure that everything is up to date. As rates increase, your buying power will decrease, so make sure you know how much home you can afford. Once you have that figured out, I have four tips for buyers looking to purchase a home before interest rates get too high:
1. Know your credit score. Don’t use some third-party service online. Instead, use one of the top-three credit-reporting agencies. This is what lenders use, so they will give you a more accurate evaluation.
2. Know your debt-to-income ratio. Add up all your debts and see what can be paid off before applying for a loan. Also, see if you are due for a raise or anything else that may increase your income. From there, it’s time to start saving up for a down payment.
3. Don’t make any large purchases before buying. Don’t buy a bunch of furniture on credit for your new home before you close. It could affect your credit score and gum up the sale.
4. Pay off charge card debts. This is an easy way to increase your credit score.
If you’re a seller, what do rising rates mean for you? Home prices have been rising for a while, and if rates increase, affordability will decrease. If you want to sell your house in the future, you may not command the same price you can now. I recommend you begin thinking about selling sooner rather than later.
If you have questions about today’s topic or anything else related to real estate, please call or email me. I am always willing to help.