How To Approach Rising Mortgage Rates as a Buyer
In the last few weeks, the average 30-year fixed mortgage rate from Freddie Mac inched up to 5%. While that news may have you questioning the timing of your condo or home search, the truth is, timing has never been more important. Even though you may be tempted to put your plans on hold in hopes that rates will fall, waiting will only cost you more. Mortgage rates are forecast to continue rising in the year ahead.
If you’re thinking of buying a condo or home, here are a few things to keep in mind so you can succeed even as mortgage rates rise.
How Rising Mortgage Rates Impact You
Mortgage rates play a significant role in your condo or home search. As rates go up, they impact how much you’ll pay in your monthly mortgage payment, which directly affects how much you can comfortably afford. Here’s an example of how even a quarter-point increase can have a big impact on your monthly payment (see chart below):
With mortgage rates on the rise, you’ve likely seen your purchasing power impacted already. Instead of delaying your plans, today’s rates should motivate you to purchase now before rates increase more. Use that motivation to energize your search and plan your next steps accordingly.
The best way to prepare is to work with a trusted real estate advisor now. An agent can connect you with a trusted lender, help you adjust your search based on your budget, and make sure you’re ready to act quickly when it’s time to make an offer.
Bottom Line
Serious buyers should approach rising rates as a motivating factor to buy sooner, not a reason to wait. Waiting will cost you more in the long run. Let’s connect today so you can better understand your budget and be prepared to buy your condo or home even before rates climb higher. Contact us at 734-761-3060 or info@condohotline today!
Saving up for a New Home or Condo? Here Are All the Costs You Need to Know
Once you’ve found the perfect home or condo and secured the loan, all that’s left to do is start chipping away at those mortgage payments…right? In actuality, there are a handful of other, often-overlooked expenses that come with buying a home, but as long as you know what you’re getting into, they’re plenty manageable.
Take a look at our comprehensive list of all the costs you need to know when buying a home or condo.
One-Time Payments & Closing Cost
Saving up for a New Home or Condo? Here Are All the Costs You Need to Know
Once you’ve found the perfect home or condo and secured the loan, all that’s left to do is start chipping away at those mortgage payments…right? In actuality, there are a handful of other, often-overlooked expenses that come with buying, but as long as you know what you’re getting into, they’re plenty manageable.
Take a look at our comprehensive list of all the costs of buying a home or condo.
One-Time Payments & Closing Costs
Closing Costs
For buyers, closing costs are typically low and range from 2-5% of your purchase price. A lot of these costs are one-time expenses, and totals can vary from state-to-state.
If you want a better idea of what closing costs could be for you, check out this helpful guide on the average payments for each state.
Miscellaneous Fees
There are quite a bit of one-time fees bundled into your closing costs, but most of them are pretty inexpensive. Some of the most common expenses include the home inspection, appraisal, credit report, deed recording, land survey, notary fees, title insurance, and document prep fees.
Recurring Payments
Mortgage Payments
Mortgage payments are the most obvious cost when buying a home. These are your predictable, monthly payments decided by both the final price of your home and your down payment—in addition to a few other bundled costs. A larger down payment means a smaller mortgage payment, and it’s a good idea to pay this off quickly, since it will accumulate interest.
Property Taxes
Property tax payments don’t go towards just one thing—they actually cover quite a bit, like road construction, community maintenance, public works, and local government salaries. The exact amount you’ll pay in property tax is calculated by the county based on your home’s value, and the rates tend to rise and fall over time. Many buyers pay their property taxes through an escrow account set up by the lender.
Homeowner’s Insurance
It’s better to have insurance and not need it than need insurance and not have it, so homeowner’s insurance is pretty crucial to home owning. While it’s almost always required when you get a mortgage and then bundled into your monthly payments, be sure to double-check that you’re covered.
Private Mortgage Insurance
If you can’t afford a 20% down payment on your home, you’ll have to pay PMI as a way to ensure that the lender won’t go under if you default on your loan. You don’t have to pay PMI forever—it ends once you pay off 78% or more of the principal amount—but until then, expect to pay up to 2% of your loan amount annually.
HOA Fees
Moving to a neighborhood with an HOA? Your dues can range anywhere from under a hundred dollars to over a thousand, but they come with perks like landscaping and exterior maintenance, and some even include added benefits like swimming pools and fitness centers. Not all neighborhoods have an HOA, but your agent can tell you what your payments will be if yours does.
Utilities
Lastly, utility fees can come as a surprise to new homeowners who are used to renting. Depending on the size of your home, you can expect to pay a few hundred dollars per month for water, electricity, heating and cooling, and trash services. If you’re curious what your utility bills might look like, just ask your agent, and they can likely secure a few statements from the past owners.
Ready to Make an Offer?
When it comes to buying a home, the most important thing you can do is be prepared. While there are a handful of costs to keep in mind, the satisfaction of calling a place your own is well-worth it in the end.
Are you ready to get started on your home-buying journey? With years of professional and local experience, our condo professionals at The Bouma Group knows all about navigating the expenses that come with buying. Give us a call today at 734-761-3060 or info@condohotline.com to get a better idea of your costs, and let’s get started!