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2 Answers on How To Overcome High Interest Rates and Prices
Dated: January 29 2024
In the third installment of my interview about interest rates, there are two questions that we’d like to answer. First:
What if I’m locked into a higher interest rate?
For instance, what if you’re locked into a 7% rate, but two months later, interest rates are closer to 6%? Can you still get your interest rates lower before closing? If it’s possible, then how does it work?
To better understand how interest rates work, we can use the analogy of buying gasoline. When you buy gasoline at $5 per gallon today and drive past the same gasoline station tomorrow, seeing that it is now priced at $4.75, you cannot refill your gas tank. The main key here is timing.
Waiting as long as possible to lock in the rate when the trend shows a decline in interest is important to avoid this tough situation. Another important thing to remember is that rates do not go down quickly. It is more of a trickle-down, as the Feds will do their best to make things as soft of a landing as possible.
The best thing to do when you see a slow decline in interest rates is to time it and strategize with your Realtor to figure out the best closing date.
With high interest rates and high prices, how can I afford the house I want?
For those who are facing high interest rates and prices, affordability is a concern. For move-up buyers, analyzing the whole financial picture and consolidating debt can help maintain cash flow even with higher rates.
For first-time buyers, prioritize getting into the market first, even if it means getting a smaller house. Getting a house that you can afford is recommended since long-term trends show that real estate appreciates at 4% to 5% nationally every year. Adapt a long-term strategy, and with that in mind, you can leverage that equity after a few years to move up into a bigger house.
Those two questions are part of a five-part series that provides insights into different aspects of interest rates, and while we were able to discuss some critical elements, the complexity of interest rates in real estate could still be explored more in detail.
We hope that the answers and insights provided in this series helped inform you about what we hear, see, and think about interest rates. Feel free to check out the first two parts of this interview, and if you have any more questions or would like to know more about this topic, don’t hesitate to give us a call or shoot us an email.
If you have questions about your real estate goals, call or email Rich Waller. You can also visit his site by clicking HERE.
Every day my goal is to provide the best service to my clients that I can. I want to make sure they get the most out of their real estate experience. I have been in the real estate business since 2006....
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