Everyone knows that interest rates have been creeping higher. The question is whether you need to change your home buying plans because of it. There are a variety of factors to consider when you’re looking at the Davie real estate market, as you will see below.
All of the coverage in the media about interest rate increases – whether they have increased, or might increase, or will increase – can tend to make you feel as if buying at a higher interest rate will break your budget. You need to do some math to determine what the impact of increased interest rates will be.
Here’s an example. Let’s say you’re financing $200,000. Your monthly payment for the mortgage itself would increase by approximately $60 per month for every half-point increase.
At 4.5 percent, you’d pay around $60 per month more than at 4 percent. At 5 percent, you’d be paying $60 more per month than at 4.5 percent. If a difference of $60 per month makes it impossible for you to purchase, you’re probably overextending yourself in the first place.
Also, keep in mind that interest rates don’t typically increase in half-point increments. For example, in December, mortgage interest rates went from 4.13 percent to 4.16 percent during one change. In addition, rates have stayed under 5 percent for the past 10 years. We have a long way to go before we get close to an average rate.
The possibility also exists that homes will appreciate at a slower pace than we saw last year. While we’re currently in a seller’s market, the supply of homes on the market is low, and rising interest rates will scare some buyers out of the market.
Buying in a seller’s market has a strategy all its own. It isn’t necessarily more difficult to buy, but you need to use the right strategy. In a seller’s market, sellers can be more particular about the buyers they deal with. Sellers want buyers who can prove their ability to close a deal. Sellers can also be less likely to negotiate on price because buyers are plentiful.
If you’re buying in a seller’s market, make yourself a prime catch for any seller.
It doesn’t matter if you’re a first-time Davie real estate buyer or looking to buy a Davie luxury home, you’ll get the best outcome if you work with a top Davie REALTOR®. The agents on Teri’s real estate team are local real estate experts and can help you navigate the ins and outs of the Davie real estate market. Call us at 954-242-8030 or contact us online.
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