We all know that the real estate market can be a mercurial minx at its best and a traitorous beast at its worst. One of the biggest factors that can affect its temperament? Interest rates.
Interest rates can have a significant impact on the affordability of homes and the overall health of the real estate market. When interest rates are unstable, it can be challenging for buyers to navigate the market and find the right property at the right price. However, with certain tactics, it’s possible to buy a home in an unstable interest-rate environment. Let’s explore some of these strategies.
Get pre-approved for a mortgage
One of the first things you should do when buying a home is to get pre-approved for a mortgage. This is especially important when interest rates are unstable, as pre-approval gives you a better idea of what you can afford. A pre-approval will also give you an advantage over other buyers who haven’t been pre-approved, as it shows you’re a serious buyer.
Keep an eye on interest rates
When interest rates are unstable, it’s essential to keep a close eye on them. In today’s environment, interest rates can change quickly, so you’ll want to be aware of changes that could affect your ability to buy a home. You can sign up for alerts from your lender or use online tools to track interest rates.
Be flexible with your timeline
When interest rates are unstable, it can take longer to find the right home at the right price. You may need to be flexible with your timeline and be prepared to wait for the right opportunity. This may mean renting for a few more months or staying in your current home longer than you originally planned.
Negotiate with the seller
In an unstable interest rate environment, the seller may be more willing to negotiate the price of the home. This is because they may be motivated to sell quickly before interest rates increase even further. In this situation, make a lower offer than the asking price and be prepared to negotiate.
Consider an adjustable-rate mortgage
An adjustable-rate mortgage (ARM) can be a good option in an unstable interest-rate environment. With an ARM, your interest rate will adjust periodically, typically every one to five years. If interest rates are currently high, you can start with a lower interest rate and adjust it later when rates fall.
Work with a real estate agent
A real estate agent can be a valuable asset when buying a home in an unstable interest-rate environment. They can help you navigate the market, provide insights on interest rate trends, and negotiate with the seller on your behalf.
Buying a home in an unstable interest-rate environment can be challenging, but it’s not impossible. By approaching the situation with patience and a plan, you can make strategic decisions that will put you well on your way to homeownership.
By Sean McIllwain. Sean is the founding broker of Mod Boulder Real Estate. Call 720.252.6051 or visit modboulder.com.