Many people fret
rising tide of interest rates. You’ll hear things like, “Did I miss boat? Is it too expensive now to buy a home? How can I afford house of my dreams? Maybe I should wait! Maybe I should just rent for a while! Maybe rates will go down in a few weeks. “Stop! Nonsense, I say!
I bought my first home at close to 9%. Buyers from 80’s told me I was getting in at a bargain, and anyway, who cares? I don’t. I refinanced long, long, long ago. 9% is just a part of history now.
So, here’s 5 important points you need to keep in mind, when ebb and flow of interest rates, ebbs up, more than it flows down…
1.There’s no better time, then NOW! 2.Long Term Investing 3.Creative Financing 4.Uncreative Financing 5.Buying a Home when Rates go Down
1.There’s no better time, then NOW!:
I know it sounds cliché, but it’s true. There’s no better time to buy, then now. Why?
a)Because if rates are going up, then law of supply and demand insists that rising price of homes will likely slow down.
b)Since appreciation slows down when rates go up, this is an opportunity to buy at a perceived discount
c)Remember, rates fluctuate, and nothings forever. So, it’s more important to get your darned foot in door, right now. You can always refinance later, as rates ebb and flow back down. You’ll still have benefit of having gotten into house, at a lower, discounted price, and you can then enjoy both a low rate when you refinance, alongside knowing that you got house when prices slowed down, maximizing gain when appreciation revs back up again.
See what I mean? Don’t wait. It only gets more expensive. There’s always, no better time, then NOW!
2.Long Term Investing:
If this is your first home, then you have to think beyond next year or so, and move your frame of reference into a longer futuristic point of view.
a)Are you going to live in same house, for at least 5 years?
b)Most of us would answer yes, therefore, you need to be more concerned with real estate in long term, let’s say beyond 5 years, and you need to be less concerned with short term rise and fall of rates. You’ll drive yourself nuts otherwise.
c) 5 years is a pretty solid range of time, for rates to go both up, and down. In other words, history proves that for most part, you’ll live through ebb and flow of rising and falling rates, as a homeowner, and you know what? You’ll survive; in fact, you’ll thrive, because you’ll enjoy a net gain in appreciation over long term.
So rates go up and down in short term, but in long term, real estate always appreciates, and that means that homeowners always win.
3.Creative Financing:
This is good stuff. When rates go up, opportunities abound. You see, many homeowners, builders, and developers, find themselves in more negotiable positions because of laws of supply and demand. Surplus rises, and buyers slow down.
a)If financing is an issue, then you may be able to negotiate with owner to carry note, and completely bypass more conventional lending institutions.
b)If affordability is an issue, then perhaps you’ll find many more re-sales out there, perhaps fixer-uppers, ready to negotiate for a lower price (Can you say, built in equity?)
c)If discounts and incentives are your game, then perhaps you’ll locate some developers anxious to move inventory, with a flare for adding a rebate, or doing you’re landscaping, or building that retaining wall you wanted.
