Silversons Real Estate Chatter - Your 2-minute take
I want to buy a house. What should I do in an uncertain market?
Interest rate reality check. We have all watched as the Fed has raised interest rates which softens buying power. But the reality is, interest rates have been at significantly lower levels than in the past, and rate fluctuations are to be expected over time. The annual rate reached 13.74% in 1980, and in 1981, the rate reached a high of 16.63%, nowhere near the current numbers. So remember, although it may seem discouraging, interest rates are cyclical and will undoubtedly change again. The good news is, there are options to make a mortgage work for you. Speak with more than one mortgage broker and shop around the mortgage market to see where the best deal is. If you have a relationship with a bank or lender, you can often secure a better rate. Lenders offer many different packages and options for types of mortgages as well, depending on a customer's situation. For instance, instead of 30-yr fixed, a 7-10 yr arm could be an advantage and refinancing is always an option if (and when!) rates come down.
Be aware of the market. The days of multiple bids and intense competition are mostly behind us. Make sure your broker brings a variety of comps to the table so you can see the reality of the housing prices landscape. Be cautious in your offer price and don’t overpay. It’s not likely you’ll be competing heavily, and even though inventory is still somewhat tight, buyers have more leverage (less competition) than they did earlier this year.
Collect your team. Get your team prepped and ready. Who is your real estate attorney, your mortgage broker, your inspector? Have your team on call to be able to move swiftly when you do get serious about an offer. Having your team in place and ready to go is a valuable tool when timing is of the essence.
The question - Buy now or wait? We say don’t wait. There are always people who need to buy & sell. Yes, the market seems uncertain, but waiting it out for an interest rate decrease or a surge in inventory may mean a missed opportunity. If you are ready to make a move for whatever personal or lifestyle reason, play the long game not the short! Waiting is not the answer, but finding your best scenario within the current environment is always the best option.