Buying With A High Interest Rate
Buying With a High Interest Rate can be challenging but K2 Premier Realty would like to help those trying to buy a new home during these difficult times. Everyone knows the current interest rates are substantially higher than they were during much of the pandemic, and yet still higher than they were pre pandemic. I know this is difficult when you’re limited in purchasing power and need to find something not overpriced with reasonable taxes. The other big stick in the mud is the lack of inventory. With this lack of inventory comes another problem for the high interest rate buyer. When a home does become available it disappears quickly, and you’re not out of the doghouse yet. With a low inventory count comes inflated or higher median prices as the sellers know this and, in most cases, there is not much available for you. So, what should you do?
Is there any simple answer? Not really, but here at K2 Premier Realty we can offer some options, a few facts, and some things to consider first that will help you get through this and find the home that meets your needs and budget. If you have a short time window to make this happen you should first consider, do you have a long list of needs, or just wants? You may need to sacrifice a few of those wants and, in most cases, they turn out to be something you can do or add to after you own the property.
After you curb your wants and focus on your needs you will reduce the requirements of your search, which will usually add more properties to the available list. You know your approval amount, and if you can stay in it or below it that’s great. What most people don’t realize is the amount of the taxes is and should be a primary focus point. When looking at a mortgage payment, your taxes are divided into 12 months and your purchase amount is divided into 360 months. So, you can use this simple calculation for a
better understanding of home price versus home taxes. Let’s look at a small number starting with a home price of $100,000 and taxes on the same home you will see that it makes up a much smaller portion of your monthly payment than the taxes will $100,000/360 months is $277.78 per month on purchase price and then your taxes of $2000/12 months is $166.67 per month as the other part of your payment totaling your payment at $444.45 per month so initially the majority of your short term payment goes to taxes. Keeping in mind this is something most home buyers either don’t consider or forget about during the buying process. In many cases with a lower taxed home, you can buy above your approval amount just because of that reason, but if you stay under it with those lower taxes your monthly is even better and makes your chances for success better. So here is a thought. If you’re working with agents that understand this like K2 Premier Realty does, you know you’re in good hands and this is how we can help you to move to your end goal!
