4 Reasons Home Buyers Shouldn't Be SPOOKED By Higher Rates
Patrick Gillan, REALTOR/Broker
Don't get the wrong idea, we all prefer lower mortgage interest rates. Maybe your timing was so lucky that you were able to lock in something below 3%, and you can enjoy bragging about it to the rest of us. The fact is, higher mortgage rates make the purchase of a home less affordable. In other words, you might be able to afford less house than you could when rates were low.
Don't be afraid! Here are four reasons why home buyers shouldn't be spooked:
4. Consider: Rates in the 3% range were historically and artificially low. We've all heard the Boomers regale us with accounts of how rates under the Carter 70's and 80's, rates were in the high teens. Rates under 5% were never expected to last even as long as they did. Take a look at the long arch of history, 6.5% is not horrible. It's realistic.
3. Rents are on the rise. If you're renting now, you may have noticed. Renting vs. buying might not be such an attractive option when you see what your options are out there to lease. Renting has become expensive.
2. Real estate market to balance. We've experienced a white-hot Seller's market and tremendous growth in real estate values over the last two years. Buyers were having to compete in negotiations in extraordinary ways, and often first-timers were just unable to compete. Ultra-low rates were like rocket fuel to the buying frenzy and subsequent inventory shortage. With rates in more normal ranges, buyers will have a more level field to negotiate with sellers.
1. Home Mortgage Interest Tax Deduction. Homeowners can deduct the cost of mortgage interest right off their income tax liability. And get this....mortgages are amortized, meaning you pay the most interest in the first few years.
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