Mortgage rates have been rising lately, and you may be wondering whether to put your real estate plans on hold or charge ahead into the marketplace to find your dream home. The reality is that interest rates in a variety of markets, while they have certainly ticked up in recent months, are still close to historic lows.
If you decide to wait for a lender to offer you a better deal than you're able to find right now, you may be waiting for quite a long time. The Federal Reserve has signaled very clearly that they intend to keep raising rates in an effort to stem the tides of rising inflation. Whether this plan will work or not remains to be seen, but it’s fairly certain that they intend to stick to their word for the foreseeable future.
As long as you understand what's happening, you'll be able to navigate the real estate market with ease during a period of rising rates and maybe even pick up the deal of a lifetime.
While mortgage rates determine the amount of interest that you'll pay each year as a percentage of your loan amount, these rates interact with the home's absolute price to determine the exact amount that you'll need to set aside for monthly payments. In other words, you'll pay substantially more per month on a $500,000 mortgage at a 3% interest rate than you'll pay for a $250,000 mortgage at 7% APY.
In general, when interest rates rise, prices decrease to compensate. However, your purchasing power may lessen as you pay more per month for a home with a lower price but a higher rate.
Even a fluctuation of 0.5% can make a significant difference over the life of a loan.
Although home prices may decrease as rates rise, lending standards tend to increase, making attractive mortgage offers harder to come by. As many people found out the hard way in 2007 and 2008, when lenders increase standards, there is a very good chance that the mortgage offers you see today will not be available to you at the same terms in the future for quite some time.
If you have credit issues or anything else that you're worried about, check out our preferred lenders for help finding the best financing options for you! Plus, for a limited time when you buy a NT home and finance it with one of our trusted lenders, we’ll pay 1% of the home price towards financing!* Overall, there are many good reasons to seize the opportunity and purchase a New Tradition home today.
* Offer valid on homes purchased between 4/1/22 and 7/1/22. Must be financed through one of our approved Trusted Lenders. Interest rate must be locked with an NT Trusted Lender prior to the start of construction. Promotion applies to 1% on the base price for a pre-sale home, or 1% of the total purchase price on a Designer Home. If closing cost option is selected, New Tradition will pay 1% of the base price of qualified buyer’s allowable closing costs.
New Tradition Homes was such a pleasure to work with, it was an amazing experience building our first home with them. Every person we interacted with was knowledgeable and extremely friendly. We had a good balance between standard amenities and upgrades to fit our budget and make our home perfect for us. We highly recommend New Tradition Homes and would work with them again if we ever wanted to build again!
SPECIAL FINANCING OFFER!
Let us help you increase your buying power! For a limited time, buy any New Tradition Home and we will pay 2% of the home price towards financing!
*Some restrictions apply. See Sales for details.