Don't Fear Mortgages Today

Don’t fear mortgages today!!

Lately it seems like everyone is discussing why they’re NOT going to buy a house because of increased interest rates. And yes, they are higher now, but talk to some of those baby boomers out there and you’ll see what “high” interest rates really look like! In October of 1981, an interest rate on a 30-year fixed rate home loan was a whopping 18.6%. Did that make you shudder a bit? Us too!

Wait? Why, though?

As a seasoned mortgage professional who has been watching the current rates unfold for months now, I hear lots of talk about waiting. Waiting? Wait for what? Sellers are often having to put houses on the market for the appraised value now and having to help pay some buyer closing costs. It’s no longer a pure seller’s market like the pandemic era, and sellers are no longer seeing the insane demand for their house they were seeing just months ago. It isn’t the same buyer’s race with a group in the driveway waiting to go in, another spending two minutes inside the home, and a third touring the backyard simultaneously. Buyers used to be concerned that others would grab a house out from beneath them, so they would pay above asking, sometimes to the tune of double-digits over. Now, buyers are agreeing to listing prices and asking for seller credits to pay for discount points on products such as a popular buydown product (like a 2/1 buydown)!

How do you get over the sticker shock of current rates?

Anyone who has followed the economic cycles of the past several years understands that higher interest rates aren’t going to last forever. As the saying goes, what goes up must eventually come down, and the same is often the case economically. The million-dollar question is, when will rates come back down? Six months, 13 months, two years? No one really knows, but everyone has a lot of guesses. Right now, one thing that is certain is appreciation. Houses are appreciating at a crazy clip. Can this keep going? Economists and mortgage professionals alike say probably not. While interest rates may be less ideal, fast-paced appreciation is also ticking up quickly as well. Economists can predict that interest rates will go down as inflation goes down, and it’s entirely possible for you to later refinance to a more ideal rate that lets you still capitalize on those net appreciation gains on your biggest financial asset, you home.

What difference does your lender and their knowledge make?

Are you a recent college graduate and your income is going to increase in a few years? Are you looking for your forever house after your kids have all left the nest? Are you looking for a ‘right now’ home and not a Mr./Mrs. house? No matter your situation, we can help you find the best mortgage for your current situation. Remember that buydown product I mentioned earlier? This mortgage product helps you decrease your mortgage payment in the first few years of owning your home, and there are also adjustable rate mortgages that can be utilized for purchases. ARMs provide a lower interest rate for a fixed period and adjust after the fixed period is over. For example, a common ARM right now is a 5/6 SOFR ARM. The 5 is the number of years the loan is fixed. The 6 is the adjustable part of the loan. It’s the number of months the loan will adjust, and every six months rates will be adjusted up or down depending on the SOFR margin and index set at the time your loan was closed. There are also mortgages that can help you if you are self-employed. 

As an indie mortgage company, Fountain Mortgage has no lender fees, features discounted title costs since we pair with a national provider, and we’ll also work with you as rates drop so you know when to refinance! 

Why buy now? Free money?!

Right now, sellers are figuring out it isn’t a seller’s market any longer in most areas of the country. Due to this fact, a lot more sellers are offering credits in sale contracts. These seller credits give you buying power when shopping. This power can be used to reduce the amount you’re bringing to closing by giving you a credit at closing. These seller credits can be used to reduce your payment and or rate. The Buydown mentioned above is funded by seller credits, and so the seller is the interested contributing party in the transaction funding your  Buydown opportunity. When the seller funds the Buydown, it doesn’t cost you anything, it’s free money they’re giving you towards the transaction. Besides exciting seller credits, there’s also appreciation to consider. Home appreciation is a key component to keep in mind and not ignore in the current market. There are areas of the country that are appreciating over 20%, and this pace is NOT likely to continue forever. Economists are predicting that increases will continue but that the current pace will taper off.

We can help!

If you want to take advantage of the home appreciation happening right now and get creative to negotiate seller credits, call me and I can help!! I  can help you find your way and navigate a variety of loan programs so that you can find exactly the right fit for you!

Katie Grimes
TeamKC@FountainMortgage.com
KatieinKC.com
913.600.4195