Ways to handle a mortgage payment when buying a home

Consumers who are preapproved and looking to buy a home are sometimes getting shell shock as relates to the mortgage payment. The rate, the purchase price, and the cash-to-close may change the cost to buy a home. Here are things you might want to do if you are buying a house…

We are presently in an inflationary environment brought on by economic factors beyond every consumer’s control. Interest rates move up based on various economic events and so far in 2022 inflation has reared its ugly head. It seems like every industry is experiencing price increases because of inflation which is running rampant throughout the United States. So, if you’re looking to get prequalified to buy a home and you want to know what the big picture is here is what to know. The Fed is increasing the fed funds rate to slow down inflation. When the Fed increases the fed funds rate, mortgage rates improve because borrowing costs on wall street cost more. This helps push mortgage rates lower.

Interest rates during 2009-2015 remained at 4%-5% for the average 30-year fixed. Covid came along and completely reshaped interest rates. People overspent on low-cost funds in the last two years and now naturally interest rates are higher. The amount of mortgage volume happening this year in 2022 in the last two years is less than half.

The financial markets are feeling the pain of inflation. This is why the federal reserve is taking measures to combat inflation. Either they will be successful in driving rates down in the next one to two years or credit will loosen making it easier to get a mortgage, or the fed will reverse course. They’ll shift into another monetary policy called quantitative easing which is the buying of mortgage backs securities. This would put the full faith and guarantee of the US government into the markets. This is another reason interest rates in the last two years were lower.

Interest rates will slowly start to come back down which will later afford you the ability to refinance your mortgage payment from the house that you bought in 2022.
If you got a 6% 30-year mortgage in 2022 that means you would want to get at least 5.3% or lower as a target interest rate for payment reduction in the future. This will also depend heavily on the amount financed. The bigger the loan amount greater the payment reduction based on a change in interest rate. That alone could save $150,000 depending on the amount financed.

The moral of the story is if you’re buying a home today and you’re getting a mortgage interest rate you might not particularly want, know that it’s temporary. There will be an opportunity to refinance estimated in the next 1-2 years to lower your interest rate by 0.75%-1% or more. This could result in not only a lower cost of funds. but also savings of hundreds of dollars per month which for many families can make difference on the bottom line.

If you’re looking to get prequalified for a mortgage and want a custom mortgage plan for you and your family start today with a  no-cost loan quote!

RELATED MORTGAGE ADVICE FROM SCOTT SHELDON

When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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