Navigating Interest Rates

The rise in interest rates has been a challenge for many buyers during their home search. There are a few solutions that buyers can utilize to keep their payments affordable.

First, consider using a local bank. Local banks often have more competitive rates because they do not always sell your loan after closing.

Another potential solution is negotiating that the seller pays your loan points. Loan points are a way of buying down the interest rate, which in turn, lowers your monthly payment. Rather than negotiate a reduction in sales price, which when spread over a 30-year mortgage has little impact on the payment itself, negotiate seller-paid loan points instead.

Last, consider an adjustable-rate mortgage. City buyers especially tend to sell within 3-5 years of purchase. Ask yourself how long you will actually own the property. If it is less than 10 years, explore adjustable rate mortgage options that provide a 5-year, 7-year, or 10-year fixed rate at a lower price than a 30-year fixed mortgage.