If you have been paying attention to the real estate market lately, you probably know that interest rates are rising. However, you may not be sure what this means for you as a homeowner. Don’t worry: we can tell you precisely what rising interest rates mean for homeowners, and what you should do to prepare yourself for them.
How Long Can You Expect Rising Interest Rates?
The first thing you will need to know is how long interest rates are likely to rise. Nobody can predict the real estate market with 100% accuracy. However, we do know that real estate interest rates have been increasing over the past year, and the Federal Reserve plans to keep hiking them. Many predict that they will continue to rise steadily over the next three years. These hikes will not necessarily be considered high by historical standards. However, they will be severe compared to the near-zero rates that have been commonplace since 2008.
What Do Rising Interest Rates Mean for Current Homeowners?
There are several things that homeowners need to understand about rising interest rates. The first is that they can dramatically affect the buyer’s market because higher interest rates also mean higher mortgage rates. Higher mortgage rates often scare away potential home buyers, since they make houses less affordable. Last year alone saw monthly increases of $117 at the median home price between September and December.
The above might sound like bad news if you have been thinking about selling your home. However, those of you thinking about staying in your home and refinancing your existing mortgage will also want to consider that decision. Refinancing is the process of paying off the current mortgage and replacing it with a new one. Refinancing when interest rates drop, can secure a lower interest rate. However, when interest rates rise, the opposite becomes true. Refinancing at a higher rate means you’ll be paying more interest on your mortgage, which you should avoid.
Rising interest rates, therefore, put current homeowners in an awkward position. Selling your home to an individual may not be practical because rising interest rates are lowering demand. At the same time, increasing mortgage rates make borrowing against your current home less valuable. Is there a way you can circumvent both problems?
Selling in a Low-Demand Market
The major problem with selling as interest rates rise is finding a buyer. If you can secure one, you can still sell your home and move into a new one fast enough to lock down a low interest rate. You’ll also end up in a house you like better. The challenge is finding someone who can purchase your current home now.
Consider selling to an investment company such as Professional Home Buyers. We purchase property for cash. As such, we move much faster than individual buyers who must often secure loans. If you want to sell quickly so that you can still obtain a favorable rate on a new home, we may be the easiest way to do so.
You don’t have to be at the mercy of rising interest rates. Don’t let them stop you from finding a buyer or trap you in your current house while your borrowing options disappear. Instead, try a proactive approach and learn more about your home quickly through an investor. Contact Professional Home Buyers today and gain more information about your options.