Mortgage Rates Continue to Rise, But the Market is Still Ripe for Buyers and Renters

The Federal Reserve has continued raising interest rates in an effort to curb the inflation currently raving most economies. These interest rate hikes have affected the real estate market, with homes becoming more expensive than ever because of the high cost of financing a home purchase.

Despite such high prices, there are still opportunities in the housing market that buyers and renters can take advantage of if they know how to do it. The following is how you can take advantage of opportunities in real estate despite rising mortgage rates.

Know Your Mortgage 

The first step to taking advantage of opportunities despite rising mortgage rates is to know your mortgage terms and rates. If you are on a variable mortgage rate, your payment will drastically increase as interest rates increase.

Therefore, you should consider negotiating with your mortgage lender to determine if you can get a fixed mortgage rate. It would be best to use an interest rate for home loans calculator and determine how much a rate increase will affect your mortgage payments.

It is always a good idea to fully understand the mortgage terms on the paperwork so you can know how an interest rate increase will affect you. Once you know this, you can work to change your mortgage and get better rates. 

Get A Fixed Mortgage

With higher mortgage rates, fewer people will borrow money for home ownership, meaning there will be less demand. Less demand for mortgages may put you in a great position to negotiate a better mortgage agreement, particularly if you have a floating mortgage rate which means increasing mortgage payments.

Use it to your advantage to negotiate for a fixed mortgage rate, ensuring you lock in lower interest rates before they rise astronomically. It will be challenging, but if you get the timing right, you can get a fantastic deal.

Borrow Money To Invest

If you want to buy property, this is the time to do so, as the interest rates will not soon come down. Therefore, instead of waiting until the rates are too high, you should lock in a favorable interest rate now and invest in real estate as soon as possible.

You will be able to charge a higher rental rate later than you could before and earn more money. The cost of capital is likely to go higher before inflation decreases, so though it may seem counterintuitive, now is the time to invest in real estate. 

Overpay Your Mortgage

If you cannot get a fixed mortgage rate and have an adjustable mortgage rate, now is the best time for you to repay your mortgage. Mortgage payments will increase according to interest rate hikes, and you will have to repay more in the future.

You should take advantage of lower interest rates and pay less by making mortgage payments in advance. You can take a break from repaying your mortgage when rates are at their highest, saving you thousands of dollars in the long run. 

Mortgage Rates Increase

According to real estate brokerage firm Redfin, mortgage payments have significantly outpaced rental payments, with the former rising 31% in the past year while rent payments have only risen 15%.

 Mortgage and rent payments are two crucial metrics used to measure price growth in real estate. The rate of increase is increasing concurrently with the Fed’s interest hikes and shows no signs of slowing down.

Buyers and renters who know how to take advantage of available opportunities are bound to make a lot of money despite many people suffering under the weight of increased interest rates. 

More change is coming in the following months, and interest rates will likely increase. The best time for renters and buyers to lock down favorable terms is now. The tips above should help you, but it would be best to consult a real estate expert for more information.

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