Mortgage rates are on the rise, and that can mean bad things for potential home buyers. Here are some steps you can take to still grab that dream home, even with mortgage rates increasing.
If you got preapproved for a specific mortgage rate, it might be time to get another letter of preapproval. While these approval letters typically last for 30 to 90 days, when rates are rising it’s a good idea to talk to your loan officer and see what they think.
Adjust Your Expectations
A rising mortgage APR reduces your buying power. As Marketwatch reports, if you secured a mortgage at around three percent, you could have borrowed about $474,400 to get a $2,000 per month payment. However, if you secured a mortgage with a four percent rate, that same $2,000 per month in principal and interest would only cover a $418,900 loan. A reduction in buying power means it might be time to adjust your expectations. You might want to look at more affordable houses or ones that you could renovate. What you don’t want to do is end up with a home that you cannot afford over the long run.
Another way to help secure that home is to make sure your credit score is as high as possible before shopping for a mortgage. Pay down your debts and make sure you’re checking your credit report for inaccuracies. The higher your credit score the better mortgage rate you’ll land.
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Original article by Chris O’Shea and adapted in partnership with SavvyMoney.