What Today’s High Interest Rates Mean for You

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You really can’t miss the headlines, even if you’re not looking to buy or sell a home right now. Interest rates keep on climbing, which often means home prices drop a bit, in turn helping the buyers in the process. But these are unique times we’re in, and despite the highest spike in interest rates in 40 years, many homes are still going for higher than asking price. Inventory also remains a concern, as does inflation. So, what does this mean for you, the buyer and/or seller? Let’s take a look:

Sticker Shock: Potential home buyers can be in for a rude awakening when they apply for their home loans or setting up their first payment. What they thought they could afford is no longer the case. Either patiently wait and keep saving money or start shopping around at lower price points. Regardless, stay up to date with the rates and do your math ahead of time. Meanwhile, folks who signed contracts a year ago for new construction are now faced with a tough decision at a higher price: do they walk away? Talk to your contractor about possibly getting money back, even if it’s a small amount.

Survival of the (Financially) Fittest: It can be beyond disappointing, even devastating, to get outbid on a home you really love. For many, this has become an unfortunate pattern, losing out on home after home to higher offers. It’s going to come down to your staying power. Bidding wars might wane slightly as prices continue to rise, but whether its ten offers or two, you’ve got to be in it to win it. If you’ve been prepared to max out your budget and you truly want that home, stick it out. Generally speaking, newly listed homes are still on the market for only about two weeks and going for above asking price.

Other Options: With the high rates on traditional fixed-rate mortgages looming, an increased number of home buyers are opting for an adjustable-rate mortgage (ARM). An ARM grants you a lower interest rate for the beginning of part of the loan, usually at 5 or 10 years. After that initial period, your rate will adjust (up or down) depending on the current market at that point in time. ARMs can alleviate some of the monetary burden on a home purchase, especially for first time buyers. But, as always, be financially aware of the market, and your personal budget – plan for the worst (rates go up at the end of your first term) and hope for the best (your payments go down).

Price Accordingly: On the seller side of things, the question still remains: How much do I list my home for? Obviously, you should always be aware of your immediate market. See how much other homes in your neighborhood are listed at, and it’s even a good idea to travel a few towns over here and there to some open houses. You’ll get an idea of what people are expecting. In addition, it’s wise to check public records to see how much homes sold versus what their list price was.

Sound confusing? It definitely can be. Which is why having the right agent makes a world of difference. The right professional knows how to make attractive offers, understands true home value, and has your best interests in mind. Reach out to Maryanne Elsaesser today to start your home transaction.

About Maryanne Elsaesser

Maryanne Elsaesser is known for individualized strategic planning and solving complex matters with calmness. Her clients say she is a "brilliant negotiator," tenacious, helpful, smart, creative, focused and has an amazing ability to read people. Consistent hard work puts Maryanne in the top 1% of brokers in the country. Maryanne is well-versed in contractual elements and understands the intricacies of navigating the most profitable net gain in each transaction. She can be reached at 551.206.9264 or maryanne.elsaesser@gmail.com.

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