Mortgage rates rose again this week, continuing the upward trend that has pushed rates up more than two percentage points higher in 2022.
As of today, rates are at their highest level since 2009 and homebuyers are looking for ways to take the sting out of those higher payments.
A recently published Wall Street Journal article highlighted three ways that home buyers are combating higher interest rates.
1. Interest Rate Buy Down
Essentially, this means taking a financial hit now to have a better payment in the future. If you are looking to buy down your rate upfront, that money can be used to improve your loan payment for years to come.
One thing to consider, however, before taking this route, is how long you plan to be in the home and if you will be able to not only recoup the initial out-of-pocket expense but also be able to enjoy the continued savings of that lower mortgage payment for several years into the future.
2. New Home Construction Early Rate Lock
If you are in the market for a brand new home, that property may not be completed until the end of 2022 or longer. It is anticipated that the second half of this year will see continued rate increases to combat inflation. One way to ensure a better rate is to lock now vs. waiting until close of escrow later this year and builders are stepping in to help make that happen.
Many of our new home buyers have locked-in rates earlier this year and as they get ready to close this Spring, they are closing at rates significantly less than what is being offered today.
3. Adjustable Rate Mortgages
Today’s ARMs are not the same as what had been offered pre-recession 2008, these mortgages are now much more highly regulated to protect buyers from the dangerous loan practices of years past.
Today there’s been a big increase in applications for ARMs because of the ability to secure a much more affordable monthly payment. There is also the possibility of buying that home now and refinancing as rates may reset lower in the future.
Want more details? Click the link to the full Wall Street Journal article here.
“Keep in mind, rising rates this year is no surprise .. in fact I mentioned it back in January during this interview with FOX 5.”