The February / March real estate rush is approaching. This is the time of year many people anxiously await so they can purchase a house. Yes, you can use the tax refund check you receive and put it towards the down payment and closing cost for your new home!
If you are thinking about buying a home, now is the time to do it! With interest rates on the rise, you should buy sooner rather than later. For the first time in almost a decade, the Feds have raised the rates .25 percent. Although the increase doesn't make a big difference right now, if they continue to rise, it will affect the amount of house you can afford. Here is an example of what I mean:
At an interest rate of 3.75% you could afford a house worth $200k, however if the interest rates were to rise to 4.75%, the amount of house you can afford has dropped to $177,500. The Buyer's purchasing power has dropped due to increasing interest rates.
Although most consumers would prefer interest rates did not rise, the fact is the economy has recovered considerably from the housing market crash in 2008. Rising interest rates means more investors will enter the market to invest in mortgage back securities. And it also means home values are stable and rising as well.
Don't panic! Interest rates are not going to go up a whole percent over night. However, if buying a house is in your near future you should begin the process of getting pre-qualified for a loan. This mean, contacting a lender to open communication about the goals of your family to buy a home in 2016.
Once you're in a fixed rate mortgage, you're interest rates will not go up over the life of your loan. However if you decide to refinance your loan, you will be subject to the current interest rates at the time of your refinance.
Unlike rental properties, when you get a mortgage you're principle and interest payments are locked in for the term of your loan. You don't have to worry about your payments going up like with a rental. If you are on a fixed income, this is a great way to stabilize your monthly expenses.
Investing in real estate continues to be a smart choice for most situations. Consult with your Realtor (that's me!) and your lender to discuss your options and begin your path to homeownership!
Tabitha Rector-Richardson
Broker, REALTOR®
email: info@premierhomesmd.com
web: www.PremierHomesMD.com
(443) 415-4215 cell
(410) 363-1535 x101 office
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