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3 Reasons Higher Interest Rates May Be Beneficial to Home Buyers
3 Reasons Higher Interest Rates May Be Beneficial to Home Buyers
As consumers, we are always looking for the best product and the best service, all at the best price. Have you heard you can't have all three, but you can expect to get two? Purchasing a new home is kind of like that. When one aspect of home buying is favorable, another may not be. But keep in mind there may be as many benefits as drawbacks, even in the current residential housing market. Here are three:
Lower Home Prices
Right now, interest rates don't look too favorable for home buyers because they are higher than they were last year which means your monthly mortgage payment increases. Even though your interest rate last year was lower, the price of houses on the market was inflated. The difference between your payment last year to this year may not be as significant as you thought.
More Home Buying Choices
There's another benefit to higher interest rates! You may have heard our housing inventory is low, there are more buyers than sellers. With so many buyers shopping for a limited number of homes, your offer may get beat out by another buyer's offer. Most of the buyers I worked with in the last five years lost out to another buyer on the first home they selected, many times even the second home they found. That problem is improving because the higher interest rates have removed some buyers from the competition.
Less Risk to Buyers
Now that multiple offers over asking price are a thing of the past, sellers are no longer "calling all the shots." For the last several years, buyers were forced to offer very high purchase prices, offer appraisal gaps and/or waiving inspections. These items expose buyers to more risk, as follows. If a buyer pays an uber-high purchase price, the home may not appreciate enough to garner the new owners a profit when they decide to sell. If the buyer offers an appraisal gap (cash to the buyer to make up for an appraised value is lower than the purchase price), again the buyer is exposed to the risk of the home not selling for more than they paid for it. And of course, waiving inspections is risky for buyers because they may discover an expensive mechanical or structural problem with the home that they were not prepared for.
In short, no matter what the real estate market conditions, there are always upsides and downsides. And there are many factors connected to home affordability.
I would love to have a conversation with you or someone you know who may have questions about a home purchase. I can help review all the angles and determine what is best for each individual situation. Call Carmen!
Carmen Osenbaugh
Commercial Sales & Leasing Specialist
Residential Sales Specialist
Irongate Inc., Realtors
937-307-0178
carmen.osenbaugh@irongaterealtors.com
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