What You Should Do If Mortgage Rates Stay High
With the increase in the 30-year mortgage rates to 7.14% — the highest to be recorded so far — there has been a fall in mortgage applications, and understandably so. It is not yet clear whether this rate will decrease anytime soon, as Sam Khater, chief economist at Freddie Mac, reiterated that the high rates price many potential homebuyers out of the market.
If you’re still interested in buying a house, all hope is not lost. Here are five actionable tips from real estate experts on what to do if mortgage rates stay high.
Buy Now
Let’s face it: Even experts aren’t certain when mortgage rates may fall. A good way to tackle this unknown is by using what you have now at your disposal, because waiting may not be worth it. According to Scholastica Gay Cororaton, chief economist at Miami Realtors, “Now is still the best time to buy a home. Why? Home prices are more likely to increase than decrease by next year. This is because Inventory is still tight and with more buyers coming into the market and supply decreasing, home prices will tend to go up.”
He continued, “Assuming a 5% appreciation, a homebuyer will still pay more in mortgage next year even if the rate falls back to 6.5%.”
Andy Passmore, vice president of mortgage lending at Security Federal Bank, added, “If you buy now and mortgage rates fall, you still made a good decision because you got the house before home prices appreciated more. And, you can always refinance later.”
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If You Already Own, Consider Refinancing
Refinancing is the process of substituting an existing loan condition with another one that has more favorable terms. If you’re a current homeowner who’s been looking for another house, you may be better off refinancing for a lower rate (if you can get it) and waiting for market conditions to change before venturing out to buy again. Pocket the money you’ll be saving and apply it to your next down payment.
STAR Financial Bank’s mortgage loan officer, Nick Brewer, said, ”For those with existing mortgages, the current environment provides an opportunity for refinancing which potentially helps to lower interest rates, reduce monthly payments or shorten the loan term.”
Seek Other Homeownership Options
There are other ways you could get into homeownership if you decide to be creative. Lisa Sturtevart, chief economist at BrightMLS, said, “Some first-time buyers purchase a home with their parents, and multigenerational living is becoming more common. [Other] homebuyers are looking for a home with rental income potential — either a duplex or a home with extra space — to help make mortgage payments.”
Explore Alternative Financing
There are alternative financing solutions you can explore to cope with the high mortgage rates. Amy Crawford, mortgage banker at Atlantic Bay Mortgage Group, shared an example. “If you are a first-time homebuyer, you can save money with homebuyer programs that offer lower rates, down payment assistance and tax incentives,” she said.
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This article originally appeared on GOBankingRates.com: Real Estate Experts: What You Should Do If Mortgage Rates Stay High
