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How to Navigate Higher Interest Rates

Updated: Sep 15, 2023

Interest rates can seem like a daunting subject, but I'm here to help you navigate and understand how they affect the real estate landscape and to guide you through making informed decisions. I can also put you in touch with a preferred lender who will be the definitive expert on interest rates!

A dark background that has "BEST RATES" it up with a number of lightbulbs
Reach out to me for a lender recommendation!

Interest rates play a crucial role in the real estate market and determine the cost of borrowing money for purchasing a home. As of now, interest rates are relatively "high" compared to the past few years, but they are still below the historical average. While these "higher rates" might seem concerning, it's essential to see the bigger picture.

A graph showing the current interest rate is still below the historical average.
Average interest rate over time.

High interest rates can impact the affordability of homes and how you navigate the real estate market. As rates rise, the monthly mortgage payments also increase. This might mean that you could afford a slightly lower-priced home than you originally planned, however, it's crucial to remember that real estate is a long-term investment, and interest rates can fluctuate over time.

Despite the current "high" (yet below normal) rates we are currently seeing, there's an opportunity to lock in a fixed-rate mortgage. This means that your interest rate will remain constant throughout the life of the loan and provides stability and predictability in your monthly payments. For a lot of people, this can be comforting. This can also be a wise choice, especially if you plan to stay in the property for an extended period.

When evaluating the impact of high interest rates, you should consider your long-term goals. Are you planning to stay in the property for many years? If so, locking in a fixed rate might be the right decision. On the other hand, if you're considering a shorter stay, an adjustable-rate mortgage might offer a lower initial rate, but it's essential to be prepared for potential rate adjustments in the future. Such adjustments can impact your monthly payment negatively, meaning your monthly payment may go up.

In addition to predictability, one of the other major pluses for locking in a fixed-rate is that you can also refinance in the event rates drop substantially while mitigating the risks associated with an adjustable-rate mortgage. In addition, many lenders are offering to waive their refinancing fees (saving you thousands of dollars) if rates drop within the next few years (I have seen up to five years offered). You will, however, still be required to pay all other non-lender associated fees.

It is crucial to look at and follow market trends in conjunction with rate trends. While interest rates are currently high, they might not stay that way forever. Real estate markets are cyclical, and rates can decrease as economic conditions change. This means that as interest rates go down, home values will almost always automatically increase.

I strongly recommend consulting with a financial advisor and lender before making any decisions. They can help you understand how "high" interest rates fit into your overall financial plan and guide you on the best course of action based on your unique situation.

Remember, high interest rates are just one aspect of the real estate equation. While they might influence your decisions, they are not the only factor to consider. Your long-term goals, financial situation, and market conditions should all play a role in shaping your choices. As your dedicated real estate agent, I'm here to provide guidance, answer your questions, and help you navigate these complex decisions with confidence! Please feel free to reach out anytime to discuss your options further or if you would like me to put you in contact with a preferred lender.

Graham Witt - Realtor w/ Keller Williams Atlanta Partners

Owner: Graham Witt Realty

Director of Sales: Team Tordik Properties

C: 847-507-7126

O: 678-341-2900


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