Hey friends, [JOE AGENT] here with Berkshire Hathaway HomeServices PenFed Realty Texas. Unless you live under a rock, you know that interest rates have been rising throughout all of 2022. The current interest rate in the (DFW/SA) area is XX%, the highest since 2008. If you're serious about buying a home in this market, you need to be savvy and have a plan for purchase. Here are 3 tips to help you buy in today's high-interest-rate market.
First, if you can, try and buy down some points on the interest. Generally, you can buy a discount point upfront by paying an additional 1% of your loan. Then, you can divide your buydown cost by the monthly savings to calculate your breakeven point. That's a lot to work through, but let's do an example.
Let's say your loan will be $300,000. If paying $3,000, 1% of your total loan, for one discount point saves you $100 per month on your mortgage payment, your breakeven point would be approximately 30 months — or two and a half years. You would have to remain in the home for at least that long to recoup your buydown cost. Talk with your mortgage lender to see what their discount point policies are, and explore if that option is right for you.
In that same vein, you may need to come to the table with a larger down payment. If your down payment is larger, you will be seen as a less risky borrower to mortgage companies. If you're able to put 20% down on a home, you may avoid paying private mortgage insurance, an additional cost on top of your monthly payment. You could even save money on an appraisal as some lenders offer appraisal waivers when you make a down payment of at least 10%.
My final tip is to be diligent about your credit score before even walking into a mortgage office. You may know your credit score off the top of your head, but a few inaccurate reports and a missed payment can cause that score to fluctuate quickly. If you're not tracking your credit diligently, you may miss an error that will sit and ruminate on your report. The quicker you notice and report the error, the easier it will be to have the error proven to be false. Think about a stain on your clothes. The quicker you treat it, the less likely it is to leave a long-term stain. It's also much easier to remove when it is fresh.
Overall, purchasing a home in a high-interest-rate market is possible, and if you're serious about finding a new home in this market, call me today at xxx-xxx-xxxx, and let's discuss your buying options!
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