Is Buying A Home Still A Good Idea with the Rising Mortgage Rates?

Is Buying A Home Still A Good Idea with the Rising Mortgage Rates?
  • PublishedOctober 21, 2022


 

Good news, there is finally a healthy selection of move-in ready, updated homes on the market.

But can you afford them?

Rising interest rates have pushed home prices even further out of reach from the average family. You don’t have to have a math degree to see how large impact of the current interest rates. According Melissa Dittmann Tracey at REALTOR® Magazine, “Consumers are facing economic pressure from every angle—rising mortgage rates, stubbornly high inflation, a battered stock market—and the financial environment keeps getting worse for aspiring homeowners who want to buy.”

Since the start of Covid and all the insanity in the world that followed, mortgage interest rates hovered around 3%+-. During that time If you wanted to keep your payments around $1,000 per month, you could finance around $240,000.

But now with interest rates at 7%, the highest they’ve been in 20 years, your budget just got cut 33% down to $160,000 to keep that same monthly payment. This increase is even more pronounced for those looking at higher priced homes. If you were looking to finance $500,000 at 3%, a 7% interest rate means you’re now only able to finance $315,000 and stay at around the same payment.

So, even though a much better selection of homes to pick from now than there has been for a couple years, and the insane bidding wars have stopped giving you time to think about the house you’re buying. This increase in interest rates has definitely dealt a major gut punch to homebuyers across the nation, especially in moderate income areas (like Hopkins County) where the majority of people don’t have much cash at all to put down on a home. This is on top of the fact that locally the average home has tripled in value in just the last 10 years.

This would normally be the part where I offer loads of good news or give advice on how to overcome the issue, but unfortunately there is no quick solution. Right now, you may be stuck waiting and hoping interest rates go back down to something reasonable. Or pray that someone just randomly decides to deposit $100,000 to your bank account.

However, a glimmer still shines in the end. Many homes in Hopkins County have been completely remodeled. That means lower maintenance and move-in ready homes for you, the buyer. It also saves you time and cost by not doing those remodel projects yourself. And if you’re already stretching your budget, I’d advise you to only consider buying an updated home. This reduces or eliminates additional and sometimes, expensive repairs on top of your monthly mortgage payment. The best takeaway? Real estate continues to be a good place to invest for longevity and stability versus renting. An inflationary economy also pushes up rent prices which means it can be just as costly to not own. Keeping Current Matters states, “With rents being as high as they are, the ability to stabilize your monthly payments and protect yourself from future rent hikes may be even more important.” Despite the fact that you may spend more money purchasing a home, you’ll also spend more money renting too. But with purchasing your own place, you can keep it until the economy improves while also building equity that you can cash out, once you sell.

 

About the Contributor: Jed Walker works as a real estate agent for Janet Martin Realty and is a full-time in a family-owned business of Real Estate Appraisers. After getting a Bachelor’s degree from Sam Houston State University, Jed left a successful sales career in Dallas to return to the business his knows best—real estate. Combining both the mindset of an appraiser and a real estate agent allows him to bring his unique perspective and approach to the home buying process. He understands that buying a home is not just a financial investment but an emotional one. Add to that, his patience and “quick on the draw” updates are just a small part of what sets him apart from those just looking for a commission check. Jed also knows how best to market your home, land, or commercial property in the most efficient manner, both in price and time.

 



Written By
Chloe Kopal

Chloe Kopal was born and raised in Sulphur Springs, Texas. She attended Sulphur Springs High School for 4 years and graduated in 2021. She was also a line member for the Blue Blazes Drill Team for 3 years. Chloe is the Digital Content Creator for Front Porch News. Her love for our community shows through her work. She is very passionate about photography and has been ever since the first time she picked up a camera many years ago.