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With Interest Rates Still Climbing, What Options Do I Have To Buy a House?

I know you have all heard how lucky people were to get in on the historically low interest rates we had for the previous few years and now it appears that ship has sailed. If you are thinking about buying a home, don't despair! There are still options that can help with your real estate transaction.

So, what does that mean? Well, first off it has sellers sitting on the fence (chances are they refinanced or bought at those low rates) and now as they consider selling their home, they are hard-pressed to jump and must buy at these high rates! If they are relocating that can force their hand as they need to move for work, family or personal reasons which limit their options presently.

So, if you are one of the people that need to buy a house or just want to, how does that work? First off, with higher interest rates you won’t be able to buy as much house as you were able to a couple of years ago. Secondly, we see people making purchasing decisions based upon “budget” and then taking into consideration size of a house, location or perhaps condition. With a higher interest rate, you are still able to purchase, you may not feel comfortable with where that payment is and that’s when you revisit location, size and condition. Perhaps it doesn’t have to be “move in ready”, or the back yard is smaller than you had hoped, or its outside your “preferred” area.

Now, what if you need to buy a house and you are still struggling with getting the payment to where you need it or are most comfortable, you must get a little creative. I have seen fellow agents advertising seller credits to be used anyway the buyer needs. Perhaps that is closing cost assistance or what about buying down the interest rate which could make the difference in your payment manageable. Many buyers are shopping based solely on purchase price. That makes sense as you don’t want to pay over your comfort level. We don’t always know the seller’s motivation to sell, and you won’t get concessions unless you ask for them. So rather than pass on a home that you are really interested in, think outside the box and ask! So maybe you give a full price offer and ask for up to $10,000 (for example) in seller concession to help buy down your interest rate.

Now on the other side of the equation, you may find a house that has just had a significant price reduction and you love it BUT you still need some help to make the payment work for you. Chances are the seller “might” not be too receptive to fork over another $10,000 (for example) but what if you came up on the purchase price and met them in the middle. That might just be enough to get the seller to accept your offer. In any of these examples you are going to need to have good discussions with your Realtor and your lender. You need to be informed about what you need to make the payment work and your lender is the only one that can answer that. You may have a number in your head that you think you need to make it work and your lender surprises you when it is much less…. ok, or sometimes more! The more information and knowledge you have going in the better the odds of a seller accepting your offer.

I encourage you to ask your agent to explore options. Sometimes a seller credit can be a price reduction in an offer whereas an offer slightly above list price and asking for some assistance could get you into your next home. You will get some no’s and perhaps a few counter-offers to make it work, but you will never get the house unless you do the work and ask. If you have questions or want to talk about your real estate goals, give me a call any time!

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