The current news about inflation, combined with rising interest rates has many people concerned. While the Federal Reserve is working to combat inflation, mortgage rates are much higher than at the start of 2022. However, as a potential homeowner, mortgage rates are not the only factor to consider when it comes to purchasing real estate. Instead, you should look at both mortgage rates, and housing prices, while considering your budget as you look to buy a home. Below we look at each factor in more detail to see if you should buy a home in the current market.
1. Mortgage Rates
The biggest factor that you should focus on as a potential homeowner is the current mortgage rates. This makes sense, as it directly impacts how much it will cost to finance your home purchase. However, with current rates almost 4% higher than they were at the beginning of 2022 this can certainly create a challenge for some home buyers. Especially, as your payments will either be larger than you may have planned for, or your overall budget must decrease. However, for those serious about purchasing, experts recommend a fixed-rate mortgage. This will ensure that you can make your payments, and protect you from further inflation over the next few years.
2. Housing Prices
The second factor to consider as you look to buy a home is the current housing market. While home prices increased drastically throughout the pandemic, prices are now decreasing. High-interest rates are actually a benefit here, as they help to moderate demand. As a result, homes are staying on the market longer, at lower prices, and bidding wars are almost non-existent. Furthermore, as homes stay on the market longer, you can have better negotiation power regarding pricing and inspections.
3. Your Budget
When you look to buy a home you must come up with a reasonable budget. To do this, first look at your income and expenses to determine how much you can afford each month. Then work with your lender to find an appropriate mortgage amount and rate. Then, work with your real estate agent to find the perfect home within your budget.
While the current high-interest rates can be scary, they do not mean you shouldn’t buy a home. After all, owning your own home can offer stability during inflation, and times of economic uncertainty, as long as you are smart with your budget. Take your time to find the perfect home within your budget, and consider a fixed-rate mortgage to ensure you have financial security.
To start the search for your dream home, contact one of our expert agents today.