After the real estate market changed in 2008, interest rates have been unusually low in an effort to stimulate the economy. Things have balanced out, and now the Fed has made the decision to increase interest rates. As a result, prospective buyers are concerned about what higher interest rates means for their house payment.
As a parent and homeowner, you want to be sure that you are protecting your family finances and providing the best life for your children. Will higher interest rates mean that you need to sacrifice your lifestyle? No! There are still many financing options available that can help you buy the home of your dreams.
Trends that are Impacting Mortgage Rates
There are many factors that can influence the interest rate changes in the mortgage industry. Everything from politics, economy, tax cuts and the media can influence how the market reacts. Over the past year, we have seen a slight increase in the rates that are offered for mortgages.
Even though the rates have gone up, these changes are minor in the overall picture. A higher interest rate might increase your mortgage or reduce the budget for a home that you can afford. Instead of assuming that you are now doomed to a house or neighborhood that you don’t want, you need to talk to an experienced lender to find solutions.
Managing Your Debt-to-Income Ratio
Your mortgage qualification will be directly impacted by your debt-to-income ratio. Lenders will look at the amount that you are spending on car payments, credit cards, student loans, and other debts. These payments are compared to the money that you are earning each month. Then, the lender decides on the size of the loan based on what you should be able to afford.
If you want a bigger loan, then you need to reduce your other payments to free up your debt-to-income ratio. For example, paying off your car or decreasing your credit card balances will improve your ratio. As a result, it frees up more room for you to make a higher mortgage payment.
Talk to an Experienced Real Estate Team
When you are ready to buy a home, then you should talk to a lender to learn about the strategies that you can use to improve your borrowing options. At the same time, make sure that you are working with an experienced real estate agent who can help you locate homes that are in your budget. By working with both a lender and a real estate agent, you can find the best solution that will meet the needs of your family.
Here at DUFFY Realty, we are one of the leading real estate groups in Atlanta. We will gladly assist in the search for the perfect home. If you need help finding a good mortgage lender, then we can provide contacts in the industry. To learn more about your options to buy a new home, talk to us at (678) 318-1700