A year ago, low interest was one of the factors that aided so many home buyers to see their dream come to fruition. Now, a year later, rising interest rates have forced many would-be buyers to put their purchase of a new home on hold.
Interest rates will ebb and flow throughout time so if you find your self on the upside of the rates, don’t put your dream on a shelf. Some options can help you purchase your dream home even with rising interest.
Here are five ways you can still be successful at buying a home when rates are not favorable.
Know the Definition of a First Time Home Buyer
Often, a first time homebuyer is not someone buying a home for the first time. Each assistance program has its own definition for a first time home-buyer. Sometimes, a first time home buyer means anyone that does not own investment property or a second home. That means if you are selling a home and purchasing a new home with the proceeds of the sale, the 10 seconds you didn’t own a home in the state makes you a first-time homebuyer.
Other times, the definition is a little more strict but don’t think assistance is not available just because you own a home or have owned one in the past.
Mortgage Shop For the Lowest Rates
When you apply for a mortgage, there is a marker set in your credit history that will not ding you if other mortgage companies run your social security number as part of mortgage shopping. Usually, the flag is good for 30 days.
Since your credit score should not be adversely affected by having several companies run your credit, don’t be afraid to shop around for the best rate.
Talk to Your Lender About Buying Points
Buying a point means if the interest rate is currently 5% you can lower the interest to 4% by prepaying the 1% you would have paid through the life of the loan.
Purchasing a point is a great way to get your monthly payment down for qualification. Points may cost a couple thousand more in closing costs, but they can often reduce mortgage payments enough to qualify for the loan.
Take Advantage of New Construction Incentives
As buying power goes down, building incentives go up. Often new home builders will offer incentives such as “flex” money. Flex money goes towards anything related to the purchase of the home. You can use it towards the purchase price, upgrades, or closing cost.
Know What Types of Special Programs Are Available In Your Area
Grant money and special programs are available depending on areas and regions.
In South Carolina, we have several great programs for both low and medium income home buyers and some that are not even income dependent. Talk to a lender that specializes in the state-run programs to see which you would be eligible. If you are a teacher, first responder, or nurse, chances are there are some great programs for which you qualify.
Remember, just because interest rates are rising and buying power is going down does not mean that you have to shelf your dream. Text or call me at 843-707-6956. I’m happy to help connect you with a few mortgage people that I’ve seen work miracles.