Buy Now, Refinance Later

By
Real Estate Agent with United Real Estate TX #0552717

I purchased my first home back in 1984 when interest rates were 21% (not a typo). I was lucky to get a First Time Homebuyer's bond that reduced the rate to 18%.  I lived in that house for 20 years and refinanced it twice.Interest rates

If you're going to buy at house today at 5% or 6%, just remember that you're not locked into that rate for the life of the loan. You can refinance later if the rates decline. If you're postponing purchasing a home now, you run the risk of rates going higher and taking longer to settle back down.

The 1/10 Rule is that for every 1% of interest rate increase, your buying power goes down by 10%. The converse is also true - if interest rates go down 1%, your buying power increases by 10%.

1/10 Rule

So for a $250,000 loan amount, here's what happens with changing interest rates:

Changing rates consequencesIf you can't handle the increased payment amount, there are ways to make adjustments to get into a home:

  • increase the amount of the down payment
  • change to a longer loan term
  • investigate adjustable rate mortgages
  • look for an assumable loan

Don't give up on finding your home. I can help you with the search and put you in touch with lenders who can help. Contact me today!

Posted by

Lorrie Semler, REALTOR
United Real Estate Dallas

Serving your residential real estate needs in Dallas, TX and all the surrounding suburbs


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Comments (1)

Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Great Blog almost noon. Have a great Summer and Year. You are a winner.

Jul 20, 2022 09:19 AM