PHOENIX — Mortgage rates continue to be high and for some, that may be the reason they’re holding off on buying a home.
But there are things you can do to make the dream of homeownership happen.
Mortgage rates keep getting higher, according to Farid Farbod, the chief lending officer at TruWest Credit Union.
“We’re back up today, around somewhere between 7 and 7-and-a-half,” said Farbod
In fact, interest rates for mortgages are at their highest level since 2002.
The 30-year fixed-rate mortgage averaged 7.09% this week. That’s up from 6.96% the week before. A year ago, the 30-year fixed rate was 5.13%.
“To the new home buyers, this is a very big shock,” said Farbod. “If you’ve been around if you’ve purchased a couple [of] homes, those rates were not sustainable.”
Farbod said that could be part of the reason people aren’t moving as much.
“Some people are waiting on the sidelines,” he said. “They’re looking to see if they can rent for a while.”
“Anytime we see a ratchet up into a new percentage rate like from 5 to 6, 6 to 7, we see the marketplace respond accordingly,” said Trevor Halpern, CEO of Halpern Residential at North&Co. “The buyers that were active at that previous interest rate, tend to slow down their activity.”
Halpern said buyers are re-evaluating their approach to the marketplace.
“When you see a higher interest rate go up… your monthly cost goes up,” he said. “So, you may have to re-budget, you may have to revisit.”
Still, he said there are strategies for those looking to buy a new home.
“Can you have the seller help you buy the interest rate down?” said Halpern. “Can you give the lender some money upfront, so that they can lower your interest rate?
Other things you can do to still afford your dream home include saving up for a larger down payment. Lenders tend to give lower interest rates to those who pay higher down payments.
It’s also a good idea to see if you’re eligible for government-backed loans, like those designed for veterans, or those for first-time home buyers.
And finally, improve your credit. While you can't control the economy, you can take action to get a better credit score.
“There are a bunch of mechanisms and tools that we can use in this marketplace to help buyers compress their interest rates, to keep affordability in the mix for them,” Halpern added.
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