3 strategies when buying or selling while interest rates rise

As interest rates start to creep up, buyers and sellers are starting to feel the pressure. In this video, we’ll go over three strategies that you can use when buying or selling a home in today’s market.

Introduction: As interest rates continue to rise, many individuals in the real estate market are searching for effective strategies to combat these high rates. In this blog post, I’ll share three key strategies that can help you navigate the market while still obtaining favorable rates. Whether you’re buying or selling a home, implementing these strategies can make a significant difference in your financial outcome. Let’s dive in!

Strategy #1: Rate Buy Downs One effective strategy to combat increasing interest rates is through rate buy downs. There are two options to consider. The first option is a permanent rate buy down, where funds are allocated towards reducing the interest rate for the entire loan duration. The second, more common option is a two-one rate buy down. In this approach, the seller provides credits to buy down the interest rate by 2% in the first year and 1% in the second year. From the third year onwards, the interest rate returns to the normal rate. This strategy allows buyers to benefit from lower rates initially, with the potential to refinance in the future if interest rates decrease.

Strategy #2: Assume Mortgages Assuming a mortgage can be a viable option if the property currently has an FHA, VA, or USDA loan with a low interest rate. By meeting the lender’s requirements and providing the necessary cash difference between the principal amount and the purchase price, buyers can assume the existing loan with a more favorable interest rate than what is currently available. This strategy can provide significant savings over the life of the loan.

Strategy #3: Adjustable Rate Mortgages Consider exploring adjustable rate mortgages (ARMs) as another strategy to combat increasing interest rates. ARMs typically offer a lower introductory rate than traditional fixed-rate mortgages for a specified period. The initial low rate remains constant during this period, after which the interest rate adjusts periodically based on prevailing rates. For example, a five-one ARM offers a fixed rate for the first five years, followed by annual adjustments thereafter. This strategy allows buyers to take advantage of the lower introductory rate while potentially benefiting from decreasing rates in the future.

Learn More about Effective Strategies for Your Situation These three strategies are just a starting point to combat high interest rates in real estate. There are various other tactics and programs available depending on your unique circumstances. If you’re interested in exploring these strategies further or discussing other options tailored to your needs, don’t hesitate to reach out to me today. I’m here to guide you through the complexities of the market and help you make informed decisions.

Conclusion: As interest rates rise, it’s crucial to have a plan in place to combat these challenges in the real estate market. By implementing effective strategies such as rate buy downs, assuming mortgages, or exploring adjustable rate mortgages, buyers and sellers can navigate the market while still achieving favorable outcomes. Remember, these strategies are just a starting point, and it’s important to work with a knowledgeable real estate professional who can guide you through the process and provide customized solutions. Don’t let increasing interest rates deter you from achieving your real estate goals. Reach out to me today to learn more and take control of your financial future in the real estate market.