Tell your clients: It could still be the right time to buy

With inflation and mortgage rates on the rise, many prospective homebuyers are wondering if now is still a good time to buy.

That's what financial advisor, Cory J. Phillips has to say to clients concerned with rising rates. Although we're seeing an increase, rates are still in a normal range when looking at data over the past 30 years. And there are other factors to look at when deciding if now is the right time to buy.

Since 1985, rent prices have risen at a rate of more than four times that of the median income, forcing renters to downgrade or spend a larger portion of their income on housing. Buying allows homeowners to build equity and often save money, as many renters see their monthly rent payments climbing faster than they have in decades. The buyer's personal financial situation and future goals are also important to weigh. How could waiting impact their ability to buy, or what kind of home they can afford?

Clients Have the Power to Protect Themselves from Rising Rates

We've seen the Federal Reserve increase interest rates five times since March 2022, and further increases could be on the horizon. While this may feel like a scary time for homebuyers, the good news is, there are several options available to make buying more affordable and less risky.

Locking Their Rate

Mortgage rate locks allow homebuyers to pay a small fee to secure their rate while they continue to shop for or build their dream home. Once the rate is locked, buyers are protected from rising rates for the duration of their lock period – lock periods range from 30 to 360 days. Rate locks including a float-down option allow buyers to float down to a lower rate if a better one becomes available during their lock period.

Taking Advantage of a Buydown

A buydown provides the opportunity for a borrower to pay discount points, a one-time only fee, upfront in exchange for a lower interest rate for a period of the loan. This could afford buyers the chance to buy before rates rise further and save with lower mortgage payments for the first years of the loan.

With the possibility of additional rate hikes on the way, the buydown method can be helpful for buyers looking to hedge against rates and protect themselves financially.