If you need assistance, please call 805-857-6928

Why buyers may lose if they don't act now. 3-22-18.

Thursday, March 22, 2018   /   by Willie Schmeltz

Why buyers may lose if they don't act now. 3-22-18.

I've been reading and following about rates over the last months and found this read to be pretty good. 

Rising mortgage rates could have a big impact on the direction your buyers choose when shopping for real estate, economists warn. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”

To avoid further complications in their plans, your buyers may want to speed up their home search this spring, as interest rates are forecasted to move higher in the coming months. Forty-four percent of home buyers say rate increases likely will force them to settle for a smaller, less expensive home that requires a longer commute to their jobs, according to a realtor.com® survey. First-time buyers may be most affected by rising costs, as increasing home prices and interest rates price some out of the market.

Mortgage rates are at their highest levels in more than four years. The 30-year fixed-rate mortgage averaged 4.46 percent last week, according to Freddie Mac, and that’s largely expected to increase since the Federal Reserve said it is likely to raise its short-term interest rates this year. That could prompt mortgage rates to move higher at least three times this year, starting this month.

“For the bulk of buyers, it’s not going to kill their decision to purchase a home,” Rick Palacios Jr., director of research at John Burns Real Estate Consulting, told realtor.com®. “If anything, it will get them off the fence by creating a sense of urgency.” Higher rates are “a kick in the pants for you to start thinking seriously [about buying].”

Rate increases—even minor ones—can add up over time. Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000. “Buyers thought they could wait forever because rates were going to stay low forever,” says Palacios. “They’re starting to realize that if they’re going to buy, they should probably buy now.”

Home buyers who are concerned about rising rates may want to lock in with a lender, which guarantees the current rate for a set period of time. Still, don’t let your clients linger on making a decision. It typically costs several hundred dollars to lock in a rate.

If you need any assistance with a professional lender we have great affiliates at your disposal. 

REMAX Gold Coast Realtors
Willie Schmeltz
601 E Daily Drive Suite 102
Camarillo, CA 93010
805-857-6928
714-501-9995
DRE# 01220383

Based on information from California Regional Multiple Listing Service, Inc. as of November 24, 2020. This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
This site powered by CINC: www.cincpro.com