The housing market may be in transition, but that’s no reason to put your home goals or financial plans on hold! Whatever your situation, there may be a loan product that meets your needs, and your Loan Officer can help you understand your options. So, if you thought you were at the mercy of the market, think again … and read on to see what’s out there.
If you’re buying, but a fixed mortgage rate is too high for you:
High interest rates, combined with high home prices, can lead to elevated monthly payments for homebuyers. If high fixed interest rates are pricing you out of the home you want, an adjustable-rate mortgage (ARM) could be an option. ARMs typically have a fixed interest rate for an initial term, and after the fixed-rate period, the rate will adjust up or down to reflect current market rates. An ARM may offer a lower initial interest than a fixed-rate loan, which could provide you with a lower monthly payment. Contact your Loan Officer to find out if an ARM loan is a good option for you.
Another option to lower your monthly payment is to purchase discount points. With this, you pay an up-front fee to lower your interest rate, which can add up to significant savings over time. Typically, each point costs 1% of your mortgage.
If you’re buying a high-priced home:
Jumbo loans (available with a fixed or adjustable rate) provide financing for properties that exceed the conforming loan limits. For 2023, this amount is $726,200 for most of the country, but it’s higher in certain areas.
If you’re renovating your home:
A home equity loan or home equity line of credit (HELOC) enables you to tap your home’s equity to pay for improvements. (Equity is the difference between what your home is worth and how much you owe on the mortgage.) Interest rates for these loans are typically more favorable than personal loans, because your home serves as collateral.
If you need to consolidate debt:
Are you working to pay off credit cards, auto loans, and other high-interest debt? This is another case when tapping your equity may be more cost effective than opting for a personal loan. Consolidating your debt into one monthly payment with a lower interest rate can make it more manageable and help you pay off your debt quicker.
What to Do in the Meantime
While interest rates are out of your control, there are things that you can do to qualify for better loan terms on your home financing:
Keep improving your credit score
Monitor your credit reports and correct any errors
Pay down excess debt
Pay all your bills on time
Keep building your down payment savings, ideally by using a high-yield savings account to accumulate more interest
When you’re ready to buy, lock in your rate to avoid rate volatility