Most potential home buyers know the basics. You can secure a lower interest rate by improving your credit score, making a larger down payment or shortening the loan term. But with interest rates for a 30-year loan currently at 6.77 percent, sometimes it takes more.
With more sellers than buyers in the market right now, more than any other time on record, the high interest rate is what’s standing in between an aspirant buyer and a home. “The people buying now are kind of the smart ones,” said Adrienne Herzog, a Colorado real estate agent. “The people who are out there now have a lot more inventory to pick from, and they have a lot more power to negotiate.”
Experts have some ideas on buying a home despite high interest rates, from paying upfront for a lower rate to seeing what the government has to offer as a loan. Here are the pros and cons.
Shop around
Pros: Comparing the rates that different lenders offer can save home buyers when rates are high. You have little to lose in asking. Now is the time to test your negotiating prowess.
Cons: Usually, every time you apply for a loan, your credit score takes a hit. But if you apply for mortgages at multiple lenders within a short time frame — 14 to 45 days, for example — you can minimize the impact. It’s also easy for buyers to compare apples to oranges, so you should study the offers side by side and ask lots of questions.
Lock in the rate
Pros: Lenders may offer a rate lock for 30 to 90 days after you’ve signed a purchase agreement with them, which can protect home buyers from seeing their rate creep up before they are even in the home.
