In today’s real estate market, we’re experiencing a unique set of challenges. Inventory shortages and higher interest rates have caused a slowdown in the industry. However, it’s important to understand that despite these obstacles, opportunities still exist for homebuyers. Today, we want to shed light on a particular group of potential homebuyers—the Move Up buyers—and how they can overcome their concerns about rising interest rates. Read on to learn strategies to overcome mortgage rate hurdles and seize real estate opportunities.
Understanding the Current Real Estate Landscape:
The real estate industry is currently driven by what we call “life event buyers.” These are individuals or families experiencing significant life changes, such as expanding their family, relocating for work, or adopting a snowbird lifestyle. These life events necessitate a change in living arrangements.
However, what we’re not seeing as often in today’s market are Move Up buyers. These are individuals or families who desire a new, beautiful home but are hesitant due to the perception that their existing mortgage rate, often as low as 3%, would skyrocket to 7% or more with a new mortgage.
Two Critical Facts to Consider:
1. Average Equity: The average equity for households in our country is currently $270,000. This means that many homeowners have substantial potential down payments for a new home.
2. Consumer Debt: On average, households carry consumer debt (excluding mortgages) of $96,000. This debt comes with significant monthly payments, often paid at minimum amounts, which means it will linger for years to come.
Unlocking Potential: Now, here’s a strategy that could change the game for Move Up buyers. What if you could use a portion of that $270,000 equity from selling your current home to pay off your $96,000 in consumer debt? Imagine the impact this would have on your monthly cash outlay. Paying off all of this debt can result in substantial savings, which can offset the impact of a higher interest rate on your new mortgage.
A Tactical Approach:
To maximize your advantage, consider pairing the debt pay-off strategy with a temporary buy-down product. This can keep your new mortgage payment just slightly higher than your existing one while ensuring you have no lingering debt.
Seeing the Bigger Picture:
If you’re only comparing your existing 3% loan to a new 7% loan, it’s understandable that it might not seem enticing. However, when you factor in your total monthly expenses in your current situation versus using the two strategies mentioned above, you might discover a fantastic opportunity to buy your dream home even in this challenging market.
Contact Our Experts:
To get a clearer picture of your current financial situation and how these strategies can work for you, please don’t hesitate to reach out to one of our Expert Loan Officers here at Choice Mortgage Group. We are here to help you navigate the complexities of the real estate market and make your homeownership dreams a reality.
In conclusion, while the real estate market presents its share of challenges, there are ways to overcome them and seize opportunities. Don’t let the fear of rising interest rates deter you from upgrading your living situation. With careful planning and expert guidance, you can move up to the home you’ve always dreamed of.
Choice Mortgage Group
Choice Mortgage Group is dedicated to helping people improve their financial situations and create lasting memories through home ownership – one loan at a time. Our team of mortgage experts build customized solutions for each of our clients, based on their specific situations, goals, and objectives.
Specializing in residential mortgage lending for over 25 years, our programs include conventional and government lending, purchases, and refinances. We also offer portfolio lending for self-employed borrowers and borrowers with complicated tax situations.
Now licensed in 14 states, South Florida is where Choice Mortgage Group started, and we like to call it home. We are devoted Florida Atlantic University Owls fans and are proud to be the official mortgage lender partner of FAU Athletics. We also support numerous other local organizations.For more information about Choice Mortgage Group, visit www.choicemortgage.com.
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