Worried about Spooky Interest Rates? Here are Some Solutions!

Interest rates are over 7%. This is a scary number after seeing rates in the 2's and 3's the past couple years. 

Will rates go back down? Will they continue to rise? Should you buy now or wait? No one knows the correct answer to these questions, but here is what I can tell you - if you buy when rates are high, you do have options for when rates go back down. 

Waiting for rates to go back down may not always be the best option. Sometimes you have to move now and don't have time to wait for rates to go down.

- If you go under contract now and get locked into your rate but rates significantly improve, you have the option to float down your rate. For example, if the market improves by a quarter of a percentage rate, you can get an 1/8th better. If it improves by half a point, you can get a rate that is 3/8ths better. This must be done within 15 days of closing and can only be done one time, but this is a great option for if rates go down while you are under contract.

- If you close on your home and rates go down, you can refinance. You can do this as early as after paying your 5th payment. This does not affect you or your credit negatively in any way and may not even cost you anything. Part of any costs of refinancing can also be wrote off on your tax returns.

- Another option if you are still in the process of finding your home, is to ask the seller for a closing cost credit to buy down the rate. If a home has had a price reduction or has been sitting on the market for an extended amount of time, when creating your offer you can request for the seller to pay a closing cost credit. Here is an example on how this would work. A $970,000 home recently had a $40,000 price reduction. The reduction would have saved the buyers $202 a month on their payment. However, the buyers offered the full original $970,000 price, but asked the seller to pay 4% in closing costs. This lowered their rate by 1.375% which lowered their payment (on the higher loan amount) by $478 a month. 

If you are wanting to buy a home, but are still worried about the interest rates, let's talk! I'd be happy to talk in more detail or see which option might be best for you.

Angel Kimmel

Realtopia Real Estate

815-546-3146

angel@realtoiare.com

AngelTheAgent.com