5 Tips for House Hunting When Interest Rates are High

Buying a home is supposed to be a fun and exciting experience, but we know that over the past few years the market has made things more of a challenge for buyers than ever! The lack of inventory has created more competition and increased home prices, and now with the interest rates at the levels they are, it only adds another layer to the process of buying a home that makes it even trickier! While it may be a more challenging market to navigate, it is far from impossible, so we’ve put together a few can’t miss tips for you to make buying a home in the current market just a little more doable! 

1. Evaluate Your Expectations

Whenever you’re starting the search for a new home, creating a wants and needs list is crucial because it allows you to step back and get a clear idea of what you need to have and what you might be able to be a little bit more flexible on in your new home. And in this market, flexibility is key! Even if you had a very stretchable budget, we just don’t have the inventory of homes coming on the market so buyers are often looking at anything and everything that comes on the market just to see if it might be a fit. If you’re committed to finding a home, you will likely have to adjust your initial idea of what your new home would be like and remain open minded. While we’d never want you to settle, the reality is that most people don’t end up with exactly what they want, so whether you’re willing to compromise on the location and expand the areas you’re searching in, or buy a home that needs a little more work to become your dream home than you’d originally envisioned, take some time to really think about where you’re willing to adjust and where you aren’t.

2. Shop around for lenders

As rates have risen over the past months, it has resulted in a decrease in the number of people refinancing and applying for loans and this comes as no surprise, because it’s exactly what raising mortgage interest rates aims to do. Most of the lenders we know are considerably less busy than they had been and are looking for new business - a great thing for you as a potential homebuyer! All lenders and all loan programs are not created equally and now more than ever, it’s important to shop around for your mortgage and compare not only just interest rates but also other terms and services as well. Local credit unions can be great places to start since they often offer portfolio loans that allow them to be a bit more flexible and competitive than mortgage brokers who package a bunch of completed loans together and sell them to larger companies. Also, once you get your preapproval, it isn’t set in stone that you have to work with that lender. You can use a preapproval from one bank and then explore rates and other options once you’re under contract to ensure you’re still getting the best situation for you. 

3. Improve your credit score

Improving your credit score is a great action step you can take when beginning your home search. A high credit score is evidence to lenders that you can make payments on time and therefore may be given a lower interest rate. One way to improve your credit score is to pay on any debt you may currently have, always make on time payments and try not to max out your debt-to-income ratio. 

4. Save for a bigger down payment

Saving more for your downpayment proves that you are less of a risk when it comes to borrowing and also correlates to lower interest rates and loan costs. Although it is not common in this market to bring 20%, a larger downpayment is a great way to lower your monthly payments. This also provides you with an opportunity to talk to your lender about programs you may qualify for or if they have any benefits that come with meeting a certain percentage for a downpayment. A larger downpayment means you will have a better equity-to-debt ratio. This compares your liabilities to the equity, which is how lenders gauge your risk level. If your ratio is too high, you may be a higher risk with your investment.

5. Benefits of working with our Team

Working with a Templeton Agent will save you additional stress, confusion, and keep your home search right on track. Not only will we work closely with you to understand your needs and wants, but our team takes pride in the ability to provide an exceptional level of service and a positive experience from start to finish! With over 17 combined years of experience, we work closely with clients to share up-to-date market knowledge and provide them the value that they deserve in order to achieve successful outcomes! 

If you're on the fence about whether or not buying with the current interest rates is right for you, check out our blog on the 3 Reasons Why You Shouldn't Let Interest Rates Control Your Buying Timeline! Finalizing specific details such as knowing your expectations, finding the right lender and loan program for you and ensuring your finances are exactly where you want them to be are going to make this process flow much easier for you. Our team closely monitors the market, trends and inventory, and is happy to support you so please reach out to us here and we will be happy to help!