Mortgage rates boasted an all-time low during the pandemic, but buyers are seeing a gradual increase in numbers as the nation recovers. This may have several implications for those currently searching for a new home. If you’re unsure about what this could mean for you and your home Buying timeline, take a look at what the Wendy Thompson Team has to say about the effects of higher interest rates.

Decreased Buying Power

Increases are nothing to be afraid of, but you should take care to evaluate the new financial situation these rates bring with them. During the pandemic, buyers could expect very low rates that required smaller mortgages. They could qualify for more expensive homes since their monthly payments would be lower.

Now, the tables are slowly turning. As interest rates improve, your buying power will decline. A year ago, you may have qualified for a $400,000 home at a 4% rate. Using a 30-year mortgage, the monthly payment would roughly equal $1,900. If that rate grows by even 1%, your monthly payment could increase to $2,138.

Lenders will not approve you for the same amount at 5% as they would have at 4%. Keep your new financial limitations in mind when continuing your home-buying journey.

Reduced Prospects

With a lower budget comes fewer options. This isn’t all bad news, but it will affect your potential home prospects. After you’re able to come up with a new number, reach out to the Wendy Thompson team to walk you through your options and best fits.

Less Demand … Less Competition

Let’s take a look at one of the perks: lower demand. As prices surge and buying power decreases, some buyers might decide to hit the brakes. You may be able to find more homes within your decreased price range than you were with a larger budget. Since several buyers will back out of the market, sellers may even reduce the price tag of their homes.

On the other hand, depending on your local market, higher interest rates could spook some buyers into quick closes. It can be a head scratcher, but our team can offer guidance on which way the local housing market is leaning.

The Bottom Line

In the end, best practices include understanding your financial situation and speaking with a seasoned real estate team who can guide you through a fluid market. Our team provides professional advice curated to your unique home buying needs. If you are hesitant about your current standing as a buyer, give us a call at 866-957-9770.

Work With a Mortgage Broker for Your Self Employed FHA Home Loan

If you are self-employed and need help getting a mortgage, you may find working with a mortgage broker is your best bet. 

Let the Wendy Thompson Team help.

We’re FHA loan experts, and we help both individuals and business owners apply (and get approved!) for FHA loans. Start your quote online today or call Wendy’s Team directly at (901) 250-2294 to make your homeownership dreams come true!