Buy Now, Refinance Later

Real Estate Agent with Texas Pride Realty Group Brokered by HomeSmart Stars 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
HomeSmart Stars

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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