Okay, there is no surprise that interest rates have drastically increased with home mortgages. Is this a bad thing? Should you be freaked out? In short, no. And let’s talk about it because it can be confusing.
People who always wait for “perfect” circumstances to take any type of action are the same people that say they “wish” they would have bought property 5 years ago or wish they would have done something great with their life. Don’t be that person.
It could be a bad or good time for you to buy BUT I’m going to give you the tools to know if it is or isn’t so you can go make it happen whichever scenario is BEST for you. Don’t wait for everything to be “perfect” before you take action. You have to take action for yourself and not wait on the world.
Rates are currently in the mid 6% range as of early November 2022. In comparison to the past few years this is significantly higher BUT if you still qualify for a loan, you have an advantage. Several people who have been shopping for homes the past two years qualified for houses because rates were so low. Now, lot’s of those buyers have dropped out because they literally cannot be approved for a loan right now to buy a house.
Those of you who don’t qualify, that’s okay! Keep saving up for a good down payment, closing costs, and moving funds and once rates drop…shop again!
Those of you who DO qualify even with high rates. This is your time to shine. There’s more houses for sale and less buyers which means you now have negotiating power, time to look at multiple properties, and think about what house you want to buy, as well as getting creative with your offers! Appraisal gaps are gone and bidding wars have drastically decreased which needed to happen in the real estate market. It wasn’t sustainable.
You might be worried to purchase a house with such high rates, but here’s the thing. You can refinance once rates come back down! If you sit and wait too long to buy, you’ll most likely be competing against the buyers that enter the market again when rates shift.
Why you shouldn’t buy!
Let’s say you qualify for a loan, but feel as if all of your income is going to go toward that monthly house payment, there’s a good chance you shouldn’t buy or you should shop for a lower price point. I’m not a financial advisor by any means but a good rule of thumb from financial professionals I trust highly is not to spend more than 25% of your take home pay on your monthly mortgage.
I love this principle because this allows you to have money for other things in your life! This concept has served my husband and I extremely well in the properties we’ve purchased. It allows you to have cushion (and pay off the house early if you want!) and flexibility to enjoy life. I don’t want you to buy a house and be stressed because you really can’t afford it even though you qualified for the loan.
I hope this blog post gave you insight as to what’s happening in the Colorado Springs Real Estate market. If you have questions, I’d love to help support you however I can. You can simply text or call me at 719-985-1593. Thanks for reading!