How Mortgage Rates Impact Home Buying Power

Recent housing market data shows the supply of homes for sale is increasing, giving buyers additional options in a market that's been tight for the past two years. So it just may be the perfect time for you to start looking for a home.

But it’s important to keep in mind that while inventory is improving, it’s still a sellers' market, so you need to be prepared as you set out on your home search. Here are three tips for buying the home of your dreams today.

1. Understand How Mortgage Rates Impact Your Homebuying Power

Mortgage rates have increased significantly this year, and over the past few weeks, they’ve been fluctuating quite a bit. It’s important to stay up to date on what’s happening with rates and understand how they can impact your purchasing power when you’re thinking of buying a home.

Even a small change in mortgage rates can have a big impact on your monthly payments. If rates rise, you could exceed your budget unless you pursue a lower home loan amount. If rates fall, your purchasing power may increase, which could give you additional options for your search.

2. Be Open to Exploring Different Options During Your Search

The supply of homes for sale is improving, giving you more homes to choose from. But historically, supply is still low. That means as you search for homes, if you still don’t find something that meets your needs, it may be worth expanding your search.

A recent Washington Post article highlights a few things buyers can consider today. It encourages opening yourself up to more areas. For example, if there’s a location you’ve previously ruled out (like a particular town, for example) it may be worth taking another look.

Also widening your search criteria up to include other housing types, like newly built homes, condominiums, or townhomes can further increase your pool of options. Casting a wider net during your search could help you find a hidden gem.

3. Work with a Local Real Estate Professional for Expert Guidance

Ultimately, you need to be prepared when you set out to buy a home. Jeff Ostrowski, Senior Mortgage Reporter for Bankrate, says:

“Taking the leap to homeownership can provide a feeling of pride while boosting your long-term financial outlook, if you go in well-prepared and with your eyes open.”

No matter where you’re at in your homeownership journey, the best way to make sure you’re set up for success is to work with a local real estate professional to help you understand your local market, search for available homes and be an expert advisor and negotiator to help your offer stand out above the rest.