With rates on the
rise, it’s time to grab that prize!
As
rates continue to rise many buyers and sellers alike are trying to decipher how
the market will react. As the old
saying goes, history repeats itself, and it likely will once again. As mortgage rates have a direct effect
on buyers’ purchasing power, there really isn’t any surprise that rising rates
generally lead to declining house values.
So how do we react, how do we plan and strategize accordingly as buyers
or sellers of Real Estate in today’s current market? The best and most effective plan of action is to prepare to
move swiftly on either a buy or sell side. Time as they say is money, and even more so when rates are
on the rise.
I wish I could sell
before values fell
Timing
of the Real Estate market, or any market for that matter, is simply
futile. We as consumers do not
hold much if any power in terms of controlling rates and/or their effect on the
market. Many buyers and sellers do
however, try to time the market with the intent to buy or sell at “just the
right time”. This strategy often
proves negative, as the thoughts of holding on for just the right time will
often lead to less then stellar results.
As we hold no control over future changes, we must move forward with a
purchase or sales plan that favors us as much as possible in the time that we
are currently in. If you are
planning on selling or purchasing, don’t wait until the time is right, as no
one really knows when that time will come, if ever. Instead, decipher what is happening now, in today’s
environment and move according to today’s conditions, not what you hope they
will be in the near future.
Maybe we should wait
to get a better rate
As
a buyer your mortgage rate will have a crucial effect on your purchase power. It’s not a secret that better credit
leads to lower rates and lower rates lead to more spending power, however
waiting for that “perfect rate” can and probably will take you out of the
market. By sitting on the
sidelines buyers simply lose opportunities that may have been perfect for
them. Sideline viewing is great at
sporting events, but if you are in the market for a new home you must be on the
field at all times. The popular
quote of “work with what you have”
is a perfect slogan for buyers in today’s market. If your rate is now higher then anticipated, prepare
accordingly with understanding that it affects the entire market at the same
time it is affecting you. So
instead of waiting for rates to drop, jump in with both feet and negotiate that
perfect home with the insight that rates are rising, not just for you, but for
all potential home buyers.
Lock and load before
you hit the road
“Locking
in” a rate is a service that many mortgage providers can and will offer which
in this environment can be an advantage for you. All buyers should be pre-approved before they enter any
homes for sale, but an extra step you may want to take is to lock in an
attractive rate before they rise again if your lender allows. Doing so will allow you to move forward
with a full understanding of where your loan amount sits and how the rate will
affect your purchase power. Having
these key points fully understood and in hand will allow for a streamlined
negotiation with no big surprises at closing. If in the process of purchasing, be sure to ask your lender
about a rate lock.
