BY Sandi Reed Burns, Realtor, Climb Properties Real Estate LLC
As a real estate agent, I hear a lot of people talking about mortgage interest rates increasing. High rates seem to be one of the biggest concerns right now for consumers. During COVID, we saw the houses sell, not only above their listed prices but also above the appraised value. The appraised value is the amount the bank will lend for the mortgage. If the home appraised for $350,000 but sold for $365,000, the buyer would need to bring the additional $15,000 of their own funds to settlement.
What agents are seeing now are lower home prices and higher interest rates for loans. The bottom line for buyers: Purchase prices are dropping, but the cost of the loan is higher.
The brighter side of this is that a consumer can purchase more home at a lower price. Even with higher interest rates, getting the house that fits a buyer’s needs is more important—the interest rate can be changed through refinance transactions a year or two down the road. It’s not all gloomy news for the sellers either, as there is still a low inventory and home pricing isn’t dramatically falling.
Nita Young from CLA Title, located in Frederick, said, “Consumers should be aware of how important an owner’s title policy is and how it protects them for as long as they own the home and that it’s transferable to their heirs. This one-time expense is a fraction of what it would cost to fight a claim at $400 an hour for an attorney.”
Ian Shimer from Embrace Home Loans said, “2022 has been a pivotal year for the real estate industry. Due to delays in materials, rise in home prices, and interest rates spiking, it has been a difficult time for most home buyers. Despite all the buzz, it is still a good time to buy. For eligible buyers in Frederick County, there are grant programs for borrowers that will allow you to take advantage of up to $10,000 in funds to put towards the cost of your new home, without ever needing to pay it back. Rates change every day, and with that comes the opportunity to refinance when they come down. Through homeownership, you not only have the ability to lower your payment in the future, but you have the ability to lower your term, tap into your equity, consolidate debt, and much more. I encourage buyers to DATE the rate and MARRY the house. It is a funny statement but true in the fact that you can always refinance to a lower interest rate, but your dream house will not always be there. Your personal agent is the expert by your side to help you find the perfect home, and your lender is the financial expert to ensure you are educated throughout the entire process, while guaranteeing you are in the best financial position possible as you make one of the biggest purchases in your lifetime.”
The most important thing that I can’t stress enough is to take the time to talk with real estate agents, lenders, title agents, and home inspectors. Yes, shop around for the best pricing and who you feel you’ll work best with.
Everything seems so rushed once you find a home you like, enter an offer, and it gets accepted. The clock starts ticking, then people often feel rushed and uncertain. I highly suggest speaking with the professionals before you find a home of choice and before you decide to list for sale.