Market Trends

The big question is; what do you do when housing prices present buying opportunities, but mortgage interest rates don’t. After spending several months embedded in this exact situation, we have discovered that many buyers may not realize that there might be options available to help solve this exact problem. This in turn would allow buyers to take advantage of the current lower prices before they inevitably start to climb again.

While it is expected that the Fed will raise interest rates at least once, if not two more times in 2023, those are widely expected to be the last rate hikes for some time. Inflation numbers continue to look better and as they continue to fall, we will likely see interest rates fall with them. What this means for buyers is that while they will likely face steeper payments in the immediate future, those could be very justifiable if there is an option to refinance to a significantly lower rate in the not too far off future. To assist in swallowing that pill in the near term, we often advise our clients to factor in seller paid closing costs with their offer to effectively have the seller pay to decrease their immediate interest rates. Sellers knowing the situation buyers are facing are often happy to contribute to those costs to get their property sold.

 Another option for the near term is to look at non-conventional loan products that may be currently available. Russ Laing, Loan Officer with Vista Lending explains that many buyers will opt to use what is commonly referred to as a “Buy-Down” loan. These are typically 3-2-1 or 2-1 buy downs. Here is a brief, non-lender explanation of how this works:

The seller contributes a certain amount of money at closing based on the loan amount for the purchase. In the case of a 3-2-1 buy-down, your interest rate would be reduced by 3% for the first year, 2% for the 2^nd year and 1% for the third year. What the lender loses in interest is made up by the seller’s contribution at closing. For a more detailed explanation of this type of loan, we would be happy to put you in touch with Russ Laing at Vista Lending.

Please feel free to reach out to us to discuss your options if you are currently in the market for a new home or rural property, we are here to help!

• Jordon Russell