Years ago, while vacationing on Hilton Head Island, we decided it was time to purchase a home or condo there, so we started looking. We spent several days looking at homes and unfortunately, we never found anything that met our criteria at the time. But our time spent with the real estate agent was priceless.
During our time looking for homes, the agent said something that has stuck with me since then. He said, “you need to stop being so picky and just get on the bus, it’s not going to get any cheaper.” How true that statement was. The condo we were “hesitating” on was selling for $220k at the time, but it needed a full rehab. More than I wanted to take on being 12 hours away. Today, units in that same complex are selling for $1.2 million. Man, how I wish that we had gotten on the bus!
The media’s scare tactics and the unknowns with this current administration is making the market very unstable, but there is no real need to worry. The housing market is strong and it is going to remain strong.
So how much does that higher interest rate impact your monthly payment? As an example, a 1% difference on a $200,000 home with a $160,000 mortgage increases your monthly payment by almost $100. Although the difference in monthly payment may not seem that extreme, the 1% higher rate means you’ll pay approximately $30,000 more in interest over the 30-year term. Ouch! That is, if you kept that same financing and never refinanced or you never sold. Highly unlikely.
Unfortunately, you don’t have a great deal of personal control over the average interest rates offered at any given time. But you do have quite a bit of control over the rates you’ll be offered relative to the average.
Your credit score is going to be one of the biggest factors in determining your mortgage rate.
Your mortgage is a loan, so like any other loan, you’ll need a very good credit score to qualify for the best rate. This means a FICO score of at least 700. To get the best rates, a score above 740 is even more desirable. Working on your credit is probably the smartest move you could make to drive down the increasing interest rates.
So do you want to sit on the sidelines and wait it out, or are you going to stay in the game? My suggestion is “get on the bus” and keep looking! Homes are not going to get any cheaper.
Call me today!