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The Federal Reserve raised its key interest rate by 0.25% on December 16th. This is known as a lift off increase. We can expect further rate increases from the Fed in 2016. What does this mean for the real estate market?
Rising interest rates make it harder for borrowers to obtain a mortgage. It's not impossible to get approved for a mortgage, but it is more difficult. For sellers, interest rate increases will impact the price of your home.
When rates slowly increase, first time home buyers may find it harder to adjust their target home prices. House hunters in general will have to adjust their wish lists to purchase an affordable home.
What can you do now to adjust? First, you need to improve your credit score. A better credit score will help you get a lower mortgage interest rate. You should also reduce your overall debt. If you're thinking of buying, check your credit report now. If there are errors in it, get them fixed now. Don't sit and wait. Finally, save as much as you can for a good down payment.
If you're a homeowner with an adjustable rate mortgage who plans on living in the home for several years, now may be the time to switch to a fixed-rate mortgage. Be sure to check the fees and closing costs before you refinance your home.
Now is the time to find a professional real estate agent to help you maneuver this changing real estate market. If you have any questions, give us a call. We would be happy to help you!
