Mortgage rates are high, but that doesn’t mean home buyers should give up on their dreams of homeownership. In fact, with a bit of inventiveness and patience, many home buyers can still afford to buy a property.
Homeowners across the country were hit hard by the economic downturn of 2021-2022, losing more than a trillion dollars in equity during that period. This was due to a combination of factors, including rising mortgage rates and home prices that had been driven up due to low inventory levels.
Those who bought their homes in 2021 or 2022 are now especially vulnerable to being “underwater” on their mortgage. This means that in 2023, they owe more money than the current market value of their home purchase—and this can make it difficult to sell or refinance the property. Also during this period, many potential home buyers saw a dramatic increase in mortgage rates and home prices.
As a result, many would-be home buyers found themselves priced out of their dream homes, unable to make the payments on mortgages they couldn’t afford. Fortunately, there are still options available for those who want to get into homeownership despite these challenges.
The housing market in 2023 is starting to show signs of life
As the economy continues to recover from the turbulence of 2021-2022, the housing market in 2023 is beginning to show signs of life. Home prices have begun to stabilize and mortgage rates are slowly starting to come down, giving potential home buyers renewed hope for homeownership.
In addition, inventories of homes for sale across many markets are increasing as builders start constructing new dwellings at a faster rate. This has been further helped by government incentives that encourage people to purchase their first homes or upgrade to better properties.
The combination of these factors means that there is now more opportunity for those who want to enter the real estate market and become homeowners in 2023.
After peaking at over seven percent in November, mortgage rates have taken a drastic turn for the better. According to Freddie Mac data just released, the average rate on the 30-year mortgage is now 6.13%, the lowest level since mid-September and even lower than before the housing market downturn began. This seems to suggest that we may be hitting a turning point in housing demand as consumers take advantage of lower mortgage rates and find greater confidence when it comes to purchasing a home. Lenders are also offering deals with starting interest rates beginning with a 5, an attractive psychological threshold that has ultimately helped stimulate recovery on the housing market — even if only slightly so far.
The high rates may still discourage home buyers from attempting to purchase a property. However, with a little creativity and know-how, potential buyers can still find ways to get into the home of their dreams.
Here are some creative strategies for buying a home in 2023 when mortgage rates are high:
• Look for homes with adjustable rates. Adjustable-rate mortgages (ARMs) may offer lower interest rates than fixed-rate loans, and these mortgages can also be customized to suit your budget. However, ARMs come with a certain level of risk, so make sure you understand the terms before applying.
• Consider creative financing options. Creative financing options, such as seller-financing or lease-to-own arrangements, can make it easier for people to get into a home without having to obtain a traditional mortgage.
• Take advantage of low down payment options. The Federal Housing Administration (FHA) loan program allows qualified buyers to purchase a home with just 3.5 percent down. This can make homeownership much more affordable.
• Consider a co-signer. Having someone with good credit co-sign on the loan can help to reduce the interest rate and monthly payments, making it easier to afford homeownership.
With the right strategies in place and knowledge of the options available, it’s possible to get into the home of your dreams despite the mortgage rates.
The Floyd Law Firm PC will effectively guide you through all of the legal services prior to, or during the negotiation of a contract of sale between the Buyer and the Seller. Our Real Estate Law Attorneys serve buyers and sellers in Surfside Beach, Myrtle Beach, and throughout South Carolina. Protecting your transaction is our focus. It is our job to know everything the law requires and to make sure everything is in order so that you can make the most of the opportunity you have.
Meeting our client’s demands and elevating the closing process requires clear communication and teamwork. This can be accomplished by looking beyond the closing table into the intricacies of each group assisting the Seller(s) and Buyer(s). It is the aim of lead real estate attorney, Patricia H. Anderson, to listen and gently guide you throughout your successful closing process – promoting honest transparency that facilitates an exceptional closing.