What You Need to Know about Higher Mortgage Interest Rates
The first week of May 2022, the Federal Reserve increased mortgage interest rates by .5%. This monumental increase came as the government tries to regain control of the economy and the inflation rate across the country. An even though a half of a percentage point doesn’t seem like that much, it can drastically impact the cost of owning a home in the upcoming years.
Interest rates were changed in an effort to slow down and maintain the rising inflation rates, starting with the rising costs of homes throughout the United States. By tacking on a higher interest rate to buy a home, it limits the monthly payment many can afford on a house, causing people to be able to afford a less. This keeps home prices down, preventing the increase in home prices across the country.
If you are in the market for a new home this summer, this news could seem like it is throwing a wrench in your homebuying plans. While increasing interest rates is definitely something you need to consider when setting your budget for your home, there are many things you can do to navigate this change.
The simplest thing to do is to look for homes in your area that are less expensive to accommodate for the higher interest costs. Once your monthly budget for what you can afford has been determined, work with your real estate agent to set a total budget for your home. This will help you search within your means and help you set expectations for what your budget allows you to afford.
If you aren’t able to decrease your budget when it comes to buying a house, another alternative is to put more money into your down payment at closing. Your down payment is not included in your total mortgage amount, which means it won’t be impacted by the increase interest rates. The more money you put down, the less you have to pay per month which mean the less will be subject to interest. If you have extra money that can be put towards your down payment, this is a great option.
While these changes in interest rates may be good for our overall economy, it can be hard on your wallet right now. Do you need help navigating this ever-changing real estate market? Our team of experts can help you get ready to buy or sell your home this summer. Reach out today to learn more about our services and options you can explore.