Interest Rates and Buying a Home
If you’re looking into buying a home, and even if you wish to sell your home, you will need to pay attention to interest rates. These rates can mean paying more or paying less over time for a home. They are a necessary evil when obtaining funds from a lender, but they are not something to fear.
Learn more about interest rates and buying a home and how you should view interest rates in the home buying process.
What Should I Know About Interest Rates?
The United States Federal Reserve is sort of a central bank that distributes currency and monitors monetary policy for the country. One of their jobs is to regulate the economy and prevent serious problems. Part of doing that is raising and lowering interest rates.
Interest rates are what the government charges banks to borrow money. In turn, banks forward these charges to consumers. When you borrow money, say, to purchase a home, you are required to pay a certain amount above the actual purchase price, as the price of borrowing money. This covers the bank’s risk in loaning you money.
How do interest rates affect buying a home? Higher interest rates cost home buyers more money over the life of a loan. A mortgage loan with as much as a half percent higher interest rate can add to your monthly payment and your overall cost, because you are paying more to the bank to borrow the money.
Eliminate Fear and Buy a Home
Now, for the uninitiated, some interest rates can scare them away from making a home purchase. Of course, everyone wants to purchase a home at the most favorable interest rate possible in order to save the most money. But waiting out the economy, or what the fickle Fed may do, can be a shell game that only breeds frustration.
There are things you can do as a potential buyer to help get the lowest possible rates. These include:
- Improve your credit score
- Reduce your debt
- Have a large down payment
- Increase your income
- Apply for a shorter term loan
- Shop lenders for the best rate
Overall, the best advice for interest rates and buying a home is this: marry the house and date the rate. In other words, make a permanent commitment to the home of your dreams, realizing that interest rates will come and go.
Finding the perfect home for your family’s needs can be a tough chore — and when you finally find it, you don’t want to be stymied worrying about interest rates. When you find the perfect home, ACT! Buy the home at the best interest rate available and settle in to enjoy it. Eliminate the fear of interest rates and live your life in your new home to the fullest.
Because interest rates always shift, be sure to lock in your interest rate at the current rate, and keep an eye on how they fluctuate. If the rates drop an appreciable amount, refinance to the lower rate. If they rise, at least you already have a lower rate locked in.
Get Help from a Local Real Estate Expert
Knowing when and how to buy a home can be troublesome, but it can be much easier with help from a local real estate expert. Jeff Cook Real Estate is the top rated real estate agency in South Carolina because our agents treat you like family. We’re not satisfied until you’re satisfied. Contact us today and connect with an experienced local real estate expert in South Carolina who can make buying a home a breeze!