Interest rates moving North

     What is going on with interest rates? How high can they go? What are some of the options for buyers? 

   It is definitely is sad situation for buyers as well as sellers. Today's interest rates are higher than 7.5% , depending on your credit. If you are trying to purchase a home today, the income requirements are very high. The high interest rates has reduced the affordibility or purchasing power for the buyers. You would think the home values have gone down since there are no buyers. Well, not necessarily.

    How can you buy a home with today's high interest rates: Here are a few ways:

1) You can buy down the interest rate. This means that you it will cost you thousands, to buy the rate by 1% or more to make the your monthly mortgage payment lower. You can of course buy down the interest rate a lot lower but the cost will be high. Doing so will lower your monthly payments.

2) You can ask the seller to contribute to buying down the interest rate. Many buyers, depending on their situation, will be happy to help out. I have represented many buyers and always ask the seller to carry the buy down interest rate cost.

3) One option that is coming back and gaining popularity as a way to reduce the interest rate and lower the monthly mortgage payments is the Adjustabe rate option. Those rates are always lower and you can refinance later when the interest rates go lower and stabilizes, changing your loan program from adjustable to 30 year fixed.

     The next question we as ourselves is why are the home values not going down. Most home owners already have lots of equity and bought their homes at a very low interest rate. So, they will not be willing to sell unless they must, either to downsize or move out of the area. As a result, the inventory is low which is helping the home prices not to drop. 

     I hope this helps. This is just my opinion.

You can always reach me @ 209.914.4751 or throug email, [email protected] for real estae questions.

Emad