Buying a home when rates seem to be flying higher and higher in the unpredictable world of real estate can be extremely stressful and daunting. It can sometimes even seem impossible. And with rental prices rising right along with the price of homes it can really just get you down.
In all reality with all the ups and downs and the stressors of the current market, the majority of homebuyers right now are saying “We’re waiting for rates to come down.”
But…what if I told you that we can strategically structure your offer to make your monthly payment more affordable while buying a house that actually fits into your monthly budget?
In a market with less competition we can use that edge to get the most home for the least amount of money but also use that extra money the smartest way possible. If you were asking me if we could get your closing costs covered and sellers concessions a year ago I’d say, honestly no. But now in this high interest rate space, sellers are realizing that they have to incentivize their home to sell. The game is on and the time is now when rates are high to take advantage of all those other homebuyers that are sitting on the sidelines.
Okay so this all sounds too good, how do I actually get into my dream home and stay within my budget? Here’s some strategies that our clients are using
1. Purchase the house for a lower price
Of course an option is always to wait it out and look for homes that have been sitting on the market for 2 weeks or longer and have your agent do a market analysis and ask the right questions to see how much wiggle room there is. However, the general rule of thumb is that for every $10,000 you negotiate off in the purchase price your monthly payment only goes down about $50-75 a month. So that leads me to the seller credit option…
2. Seller credit option
There’s a few different options when it comes to seller credits. There’s always the option of coming in with a strong offer and then asking for your portion of the closing costs to be covered which keeps more cash in your pocket. Typically closing costs for the buyer are around 2-3% of the purchase price so that does save a portion of cash for you as the buyer. What it doesn’t do is save you on your monthly payment at all. Some options for saving on your monthly payment might be to have the seller give you a credit towards buying down your rate either permanently or temporarily. This is where you will save on your monthly. I know most lenders are saying buy now and wait till the rates come down and although I do agree that the rates will come down and you have to watch how much you are paying to decrease that rate, but you also have to feel comfortable with the monthly payment as it stands. So a rate buydown in the meantime may be what gets you to a comfortable spot whether that be a temporary buydown or a permanent one.
3. Look for opportunities that have a high-yield return
Here’s another option that I would argue is probably your best one. Hire a killer real estate agent that can help you find the diamond in the rough deals. Now obviously, if you are going for your dream home, are willing to pay top dollar, and there is competition on the table, this may not be an option. However, for those of you PCSing with the military and not sure how long you will be at this duty station, investors looking to maximize monthly cash flow, or if you are going to be using this home as a stepping stone to your next one, then there may be wiggle room in there somewhere! In order to find these maximum potential opportunities you need to have some major expertise of the local area on your side, so make sure to interview your agent. After all, this is your biggest financial investment.
If you are interested in learning more about how you can purchase a home in Navarre or Destin using these creative strategies, give me a call at (253)-303-1706. I am a top real estate agent with a wealth of experience and can’t wait to help you!
