6 Ways Buyers Can Deal with the Rising Interest Rate

You know these 2 things already:

1. The interest rates are rising.
2. But they’re still historically low.

Despite the second being very true, the rates are still higher than what you’d expect to get a year ago. But fret not! Here are some of the best ways, you as a buyer can positively deal with this situation:

1. Clean up your credit.

Better credit, better rate! Check your credit report and see if there's anything wrong that can be corrected. Ask help from experts to thoroughly check and ask their advice on any changes that would should be made, payments to be paid off or paid down to improve your credit score. 

2. Shop around.

Do not make the mistake of settling with the first lender you meet. Check with several lenders and see who offers you the best rate. Better yet, ask your trusted agent for their referral. Rule of thumb: if it’s too good to be true, it is! If you have access to a credit union or a smaller local bank that knows you, make sure to check with them—they often have better rates because they lend their own money and / or have a closer relationship with their customers. 

3. Buy discount points.

“Discount points” are fees you pay upfront in order to get a lower mortgage rate. Buying a point will cost you 1% of your home loan and will generally buy your rate down by a quarter percent, although that can change from one lender another lender. Most lenders will have a cap on how many points you can buy, and may also offer the option of buying lower increments than a full point. If you plan to stay in your house for a long time, this is a great option for you. Identify how much it’ll cost you, and how long it’ll take to break even and then reap the benefits in terms of savings.

4. Lock-in your rate.

Since experts agree that rates will continue to rise, look for rate locks. They're typically only offered for up to 60 days, so if you’re serious about buying soon, consider locking in at the current rate. Ask your lender how much a rate lock will cost you and if they offer a “float down” option, which will allow you to get a lower rate than you locked in at, if the rates do happen to come down before you close on your house.

5. Pay biweekly.

By paying every two weeks, you will be making an extra payment every year that would help cut your time and interest of your loan. 

6. Refinance when rates go down.

Be updated with the current market trends or ask your realtor to give you a heads up when rates go down. When they do, refinance your mortgage at a lower rate. Make sure to ask your lender if you have that option when it happens!

Hope this help so you can save money and still get that dream house! Share to someone who’s currently buying or planning to buy!

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