real estate

Don't Let Rising Mortgage Rates Scare You Off, Local Mortgage Broker Says

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Skyrocketing home prices are being compounded by a new issue for people looking to buy: mortgage rates are also on the rise.

While both of those things are true, G.P. Theriot with the Theriot Mortgage Group here in North Texas thinks it's about perspective.

“Yes, the rates are rising. We have seen that things are moving every day as we wait to see what the Federal Reserve does and as we see how the market continues to change,” Theriot said. “But what is also true is that we are seeing rates at their lowest in 20 years. Yes, they are higher than they were at the start of the pandemic, but they are still considered low for the time being.”

He gave a specific example of how home buyers still come out on top in the current scenario.

“Just for even numbers, let’s say that you are going to buy a house for $500,000. You plan to put 20% down at the mortgage rates as of this conversation, between 4% to 5%. That’s an additional $2,700 per year on your mortgage,” Theriot said.

That’s the perspective he wants people to hear.

“You still have to think that your home is appreciating, maybe more than even 2%. That’s a $10,000 return on your investment. If you subtract the extra cash you are paying on the mortgage because of the increase in rates, you are still getting a positive return at $7,000,” Theriot said.

He said there are three things you want to keep in mind when weighing your buying power right now.

“Get a good team. A real estate agent and a lender working together is important. Make sure you have contacted a lender to know exactly how much house you can afford and what kind of loan you can get with your credit score. Work with the lender to know exactly how much cash you will need at closing. There are several costs associated with it, but in some cases, excellent credit borrowers can get away with putting less down, depending on the situation. Finally, if you don’t have cash on hand and are not ready for a down payment, maybe your game plan should be more of a marathon, not a sprint,” Theriot said.

He said in this competitive market, there are people making multiple cash offers. Putting yourself in a good spot financially before you even head to the negotiating table is the best move. Be prepared, not frustrated.

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