Are Low Interest Rate Payments Holding You Back from Selling?
Throughout our blogs, we’ve been referring to this year as the Great Rebalance. And like our market is recovering from the extreme 2020-2022 conditions, our lifestyles are shifting. New career paths, expanding families, aging parents’ health concerns, deciding to retire – we’ve all experienced some significant change. As our needs evolve, it’s not uncommon to realize our living space no longer fits our needs. But when you have a mortgage with a 3% interest rate, of course, reading the headlines about how rates have crossed the 7% threshold would make you pause. 64% of homebuyers are waiting to purchase after rates drop to 4s or 5s (2023 survey by Real Financial Progress Index from BMO Financial Group).
So, how can you afford to relocate, downsize, or upgrade to another property? With some creative strategizing, it could be possible for you to close on the right home within your budget successfully.
1) Don’t Sell: Become An Investor
Yes, you read that correctly. While the markets along the Front Range are short on inventory, we care more about our client’s long-term financial goals. Why not transform your home into a rental and embrace the role of a landlord? The passive income you would generate would cover your mortgage payment, and you’d also build wealth as it appreciates over the years. You may be able to use the equity for the downpayment on your next home.
2) Consolidate Your Debt
A non-fun fact: U.S. credit card debt just reached one TRILLION dollars! If you’re carrying more debt, you are not alone. Many homeowners have low mortgage payments but struggle to pay off their credit cards, auto loans, and medical bills. But if you were to refinance your expenses into a loan with a lower payment, it would not only snowball your debt reduction – it might free up enough of your budget to afford the higher mortgage payment on your next home.
3) Take The Tortoise Approach
Remember the fable about the tortoise outrunning the hare? In the long run, that 36% of buyers who are purchasing now at a higher rate (and will refinance once rates drop) will save and earn more money compared to the 64% waiting for rates to fall (and will contend with a more competitive market that will drive up home prices that are already higher than this year).
We want you to achieve your goals in real estate. Contact your RE/MAX Alliance agent to get local data, talk solutions, and connect with their excellent lender referrals so you can determine if you should make a move now. 2023 could be your best window of opportunity, and we don’t want you to miss out!
Source: Reuters.com, Apartmentlist.com, Nicole Rueth at Movement Mortgage