Despite low inventory and high home prices, the National Association of Realtors (NAR) Q4 Aspiring Home Buyers Profile says Americans are still holding on to their homeownership goals. After all, as I always tell my clients who are still on the fence, unless you are living with mum and pop, you are paying a mortgage. You’re better off paying your own than someone else’s. With the rental rates rising in Boston due to various factors, mainly supply and demand, nothing should deter you from considering becoming a home-owner. So, if you have been seriously considering, please keep reading, because your purchasing power about to change.
“The Senate Budget deal—along with the Tax Reform package enacted in December—will both increase federal spending, meaning that Uncle Sam will need to borrow more money and will increasingly be competing with home buyers for long-term loans,” said Aaron Terrazas, principal economist at Zillow Group. “This is already putting upward pressure on mortgage rates at the same time the Fed is tightening monetary policy. Mortgage rates have defied expectations and remain at near historic lows, but the momentum is sharply upward now.”
What does this mean for home-buyers? It means your purchasing power would be greatly affected if you are seeking mortgage to finance your purchase. As mentioned in my other post Where are Mortgage Interest Rates Headed in 2018, interest hike is unavoidable. “After all, for every one percentage point increase in mortgages rates, buying power decreases by 10 percent,” said Matthew Gardner, chief economist at Windermere, the Seattle-based real estate company. “It’s the classic 1-and-10 rule. “
My best recommendation is, if you have been seriously considering to purchase a property in 2018, lock in the rate early by obtaining a pre-approval letter from a lender. By doing this, you will not only provide yourself with enough time to identify your property, but also be assured you can comfortably afford it. Without a pre-approval, shopping for a home on Zillow or Realtor.com, or even by going to open-houses, is not the best way to spend your free time. Worst part of it is, you will not be able to make an offer on a property without a pre-approval letter. Imagine this...when all offers are due at 5pm on a Monday afternoon on your dream home, you will still be scrambling to get documentations in to a lender for a pre-approval. Nightmare...
So go get one now!
I work with a couple of great lenders in the Boston market, and I would be more than happy to connect you with them to start exploring your financing options. You don’t know what you can afford until you consult with one. And disclaimer: I do not receive any kick-back for referring you to anyone. My job is to make your home purchase experience as smooth as possible, and that includes getting you to work with professionals who I can trust, from lender to plumber.
Rachel Lura is a licensed agent at Boston City Properties specializing in sales and leasing in Eastern Massachusetts. Visit her web at Rachel Lura Homes, or give her a call at (508) 905-9442. She can also be reached atrachel.lura@bostoncityproperties.com