All right, we all know what Interest Rates hit: seven percent, so now what no?
No! No, what what do we do now? This is just crazy. Okay, housing has gotten way too out of control as far as affordability now Interest Rates are seven percent.
Well, if you’ve seen my prior videos and if you watch the news the feds are trying to combat inflation, inflation is still hovering around eight and a half percent, and because of that, the feds keep raising Interest Rates, with the hopes that it’s going to bring inflation Back down so we’re going to see these high rates higher mortgage rates for a little while longer until inflation comes back down.
Nobody knows sorry. I wish I had a crystal ball, but I don’t and I can’t predict so.
Let’S talk about some ways that we can help bring those payments down now there are some options for you. If you still need to buy a home, don’t fret over it. There are some things that you can consider as far as different types of mortgages. I also just recently learned of a new trick this week from a fellow real estate agent, and also from a mortgage lender, where you can ask the seller to help pay for your discount points towards your mortgage.
The first thing I want to throw out there is, if you can afford the higher monthly payment you want to consider a 15-year fixed rate loan. I know some people panic over that. I know when we were buying our house. My husband was like: let’s do a 15-year loan, I’m like no.
I don’t want to have that high of a mortgage payment but hear me out – and I kind of regret this too you’re – paying the loan off much sooner. Saving thousands on interest right, plus the 15-year fixed rate loans, have a slightly lower interest rate than the 30-year. I say definitely do that if you can swing those payments now another loan. I want to mention.
I’Ve talked about this before and some people freak out when this word is even mentioned. I’M talking about the arm loans or adjustable rate mortgages. I know people freak out and say: oh my God, this is what did everybody in back in 2008? Hear me out: it’s not the worst thing in the world, but I will tell you you have to be careful with these loans.
If you choose this route now with an adjustable rate, mortgage Interest Rates are lower and you’re, locking in on that interest rate for a period of time. So, for example, you can do a 5-1 arm loan, so meaning that you’ll have that lower rate for five years and then at the end of the five year period it’s going to adjust to whatever the current interest rate is, and it will adjust again every year. After that, so you have to be careful if you do choose to go with this type of loan.
There’S a five one arm loans, there’s a 7-1 arm and there’s even a ten one arm. If you chose to go at one of these loans, you have to stay on top of it and watch the Interest Rates. So if you see the rates come back lower than what you’re currently paying you’ve got to get on the ball and refinance.
Because if you don’t refinance that loan – or if you don’t sell that house before that period, is up man you’re going to get slapped with a really high monthly payment, so that’s the risk you’re taking with these adjustable rate mortgages, but they are an option now.
I just want to point out to you just speak with your mortgage broker, with your bank whoever’s going to be doing your mortgage, for you talk to that person about these different options, whether it be you want to do a 15-year loan or if you want to .
Do a five one or ten one arm see what your options are and always look at the worst case scenario, meaning that if you’d go with an arm loan, what will your monthly payment go up to say you don’t refinance and at the end of the five Years, your payments are going going to go up.
It’S going to adjust to the new rate, look at the worst case scenario and see if that’s something that you think you’ll be able to afford, but again talk to your Brokers. Talk to your Banks get all the information from them. I am not a mortgage broker a real estate agent, but I’m just sharing with you just just basic knowledge, so get the details from A lender. Another option is, is you can buy discount points?
This could get expensive. So, if you bought like say, you know one or two points that could bring the interest rate down to a more reasonable number, where your monthly payment is lower. But you’re going to be laying out some money up front and one point is typically one month of your mortgage payment.
So if your mortgage payment is say like three thousand dollars expect to pay three thousand dollars, in addition to pay for one point or six thousand for two points, so that is an option. If you have that money up front to pay for it, a lot of people don’t like doing that, but with the way things are right now it might be worth it to throw some extra money at it to buy down your points.