For many, the idea of buying a home is the American dream. The home purchase needs to be within your monthly budget. Here are things to consider in today’s present real estate market and how you can use those to your financial advantage as it relates to buying a family home…

It’s no surprise interest rates have risen and for many families who were previously pre-approved, it’s a little bit of shell shock for the same price pre-approval to have payment be several hundred dollars per month more.  When interest rates rise your competition exits the market. Less competition means less demand, which means more supply, and more supply means you can negotiate on a house far easier today than you could in months past. That $450k house that you’re interested in purchasing which had ten other offers associated with it eight months ago went to $460,000 due to demand, and now you can get that same house for $425,000. When interest rates rise you can offset the higher interest rates by negotiating a lower purchase price. Let’s say that you were pre-approved at 3.5% on a 30-year fixed-rate mortgage eight months ago. Now that 30-year mortgage for the same purchase price, same down payment, and same loan amount is now 6%. Now your payments are $300 a month more. If your agent can negotiate $25,000 off the purchase price of the house, they just bought you $300 a month of payment. Yes, your interest rate is higher, but your total monthly payment would be equivalent to what it would be by paying more for the house with a lower interest rate. Purchase price negotiation can offset the higher monthly payment.

Therefore, it’s critical to work with a local realtor and a local loan officer who understand the market and can best advise you about your options. That’s not to mention the fact that interest rates are likely going to come down in the next couple of years. In such a scenario you would be able to trade in a 6% interest rate for something more attractive like 5% or lower. This is something to consider as it relates to your spending power and the options that are available to you as an informed buyer trying to get the most bang for your buck.

It begins with a conversation with your real estate agent or lender. In the beginning, create your goals and then talk to a quality lender who can accurately walk you through your options. If you’re looking for a mortgage to get pre-qualified for a home or just want to understand what you can afford start today by getting a  no-cost loan quote!