Mortgage rates have steadily risen over the last few weeks, leading many potential homebuyers to pause their home search. And if you’re getting divorced and planning to move, this might feel frustrating and stressful. Is it a good time to buy a house, despite rising rates?
While it is understandable to be concerned about higher interest rates, this could actually be an opportunity to end up buying the home you’ve been searching for. Let’s look at what this means and how you can capitalize on this situation.
According to the Mortgage Bankers Association (MBA), mortgage applications declined by 13.3% in just one week due to rising mortgage rates. Rising interest rates are causing some potential buyers to step back from their search for a new home, leaving a higher inventory and less competition for those who stay the course and continue their home seach.
Silver Lining to Higher Interest Rates
The current market has so few homes available that any reduction in competition can be a big benefit for buyers. Less competition means more bargaining power, as sellers may have fewer options for finding potential buyers who meet their criteria and have already been approved for a loan. As such, they may be more willing to negotiate on price or terms than before.
Some terms that you might be able to negotiate in a less competitive market could be:
- Contingent offers (meaning the offer is only good when another term is met – like selling another home).
- Seller concessions – to help buy down your rate, whether permanently or temporarily, or to cover some or all of your closing costs.
- Repairs – you might be able to ask for repairs to be completed prior to closing
Furthermore, if you’re already pre-approved for a mortgage, moving forward with your purchase will become easier and faster since fewer offers will come through on each property listed.
One thing that all buyers should keep in mind is that if you’re looking for a certain type of loan (like an adjustable rate mortgage or ARM), it might not make sense anymore because these types of loans are directly affected by changes in interest rates. That said, fixed-rate mortgages remain attractive even with higher interest rates since their payments remain unchanged throughout the life of the loan, regardless of changes in interest rates over time.
Is it a good time to buy a house? The Bottom Line
Rising mortgage rates don’t necessarily mean that you need to delay your plans to buy a home, even during or after a divorce. There are opportunities here too! If you stay focused and opportunistic, you can negotiate with less competition while still getting favorable terms and prices due to current market conditions caused by rising interest rates and low inventory levels nationwide. Furthermore, remember that interest rates are continuously changing, and eventually, rates will come down. When rates come down, you will likely be able to refinance your loan at a lower rate, which means a lower monthly payment.
In closing, going through a divorce is stressful enough, without burdening yourself with the anxiety associated with higher mortgage rates. Remember this: you are never forced to buy any home, so if it doesn’t feel right, you don’t have to buy now. Renting is always an option, which will create the opportunity to look at houses and wait for the right fit.
Andrea Ransom is a Mortgage Loan Consultant for Aslan Home Lending Corporation. She began her career in the mortgage industry in 1998 as an office admin, then quickly moved into a lead processor position, where she worked for almost ten years. As a Loan Consultant, Andrea is now solely focused on the people part of the mortgage process.
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