Buying at these higher rates can be daunting, but buyers have options.

Buying at today’s soaring interest rates can be daunting. With rates approaching 7.5% and changing nearly every day, what is a potential homebuyer to do? Fortunately, there are options out there for buyers.

One great option that doesn’t get enough discussion is the 15-year fixed-rate mortgage. Compared to a traditional 30-year mortgage, this product tends to have a lower interest rate. In fact, it’s as much as 1% less. Take this, and combine it with the fact that you are paying for half of the amount of time, and you are looking at some significant savings. You even have a tremendous amount of money going to pay the principal, which is always a good thing.

Another option that you could consider is an Adjustable Rate Mortgage (ARM). These products has a fixed interest rate for a given period, then fluctuates after that. In the days when we saw 2.8% interest rates, this wasn’t a wise decision, but since they are so much higher, and since most homeowners don’t own their homes for more than seven years, it’s worth considering. These products can help you save as much as 1% off that interest rate. What happens if rates drop further? In that case, you can always refinance out of that ARM and into something at a lower rate.

“Fortunately, there are options out there for buyers.”

Is now a good time to buy? The way I look at it, it’s always a good time to buy. When buying a primary residence, your biggest concern isn’t always the economic outlook but that you are trying to provide a given lifestyle for yourself and your family. You can look at it this way: Home prices are expected to continue to rise for the next five to seven years. If you buy now and lock in your price, you can always refinance if rates return to those lower levels. That’s not where you save, however. Where you save is buying a home at a much lower price than it will be in the future. It’s better to buy at a 7% interest rate than to wait two or three years and be forced to buy at $50,000 to $75,000 more.

If you have any questions about buying a home or anything related to real estate, don’t hesitate to call or email me. I would be happy to help you.