How to Buy a Home Despite Higher Mortgage Rates

Buying a home is one of the biggest investments you’ll make in your lifetime. Unfortunately, due to current economic conditions, some potential homeowners may have difficulty obtaining a loan with favorable terms, such as lower mortgage rates. But don’t despair! There are still ways to purchase a new home even if you don’t qualify for the lowest interest rates available. Here are four tips on how to buy a new home with a higher mortgage rate. 

1. Shop Around for Different Lenders: One of the best ways to find the right lender is to shop around and compare different lenders and their offerings. Ask questions such as what kind of programs they have, what kind of down payment requirements they have, what their loan terms are, and so on. Be sure to read reviews and ask friends or family members who’ve already gone through the process for advice. A great source for lender recommendations is your REALTOR®. The best REALTORS® on the Mississippi Gulf Coast know which lenders have the best programs and services. This way you can find the best lender that offers you the most favorable terms given your situation. 

2. Put More Money Down Upfront: Putting more money down upfront can help reduce your mortgage rate because it reduces the amount of money that needs to be borrowed from the bank and thus reduces your overall risk profile in their eyes. However, this strategy should only be used if you have enough cash reserves set aside for emergencies or other unexpected expenses that may arise when buying a home. And with enough down payment you may avoid mortgage insurance which can ease the pain of a higher interest rate.

3. Consider an Adjustable Rate Mortgage (ARM): An adjustable-rate mortgage (ARM) means that your interest rate will fluctuate over time depending on market conditions and other factors like inflation or unemployment levels in your area. While this can be risky if market conditions change drastically, it could also give you an opportunity to save money if market conditions improve over time and interest rates drop significantly during this period. This option should only be considered if you are able to make larger payments when necessary or if you plan on moving within five years or less so that you won’t be locked into high rates long-term.

A popular variation that a lot of people buy buying a Biloxi or Ocean Springs home is a 2-1 Buydown. In this situation the interest rate is bought down 2 points for the first year of the mortgage and 1 point for the second year. After that the loan is fixed at the original rate for the remainder of the mortgage. For example if the rate offered is 7%, then the first year’s payments would be based on 5%, the second year’s payments would be based on 6%, and years 3-30 would be at 7%.  This can buy time to improve income to handle the higher payment or take advantage of a refinance if rates come down.  Our agents at Expect Realty have had great success in negotiating for Sellers to pay the buy down points on the Buyer’s behalf.

4. Take Advantage of Government Programs: Many local governments offer programs designed specifically for first-time buyers or those with lower incomes who need additional assistance with financing their homes; these programs often come with lower interest rates than traditional banks so it’s worth looking into all available options before settling on one lender or another. Additionally, there are also federal programs like VA, FHA, and USDA loans which offer more flexible borrowing terms than traditional loans and can help reduce monthly payments significantly by allowing borrowers access to lower interest rates than they would otherwise qualify for from private lenders alone. 

Buying a home is an exciting but complex process – especially when it comes to getting approved for a loan with favorable terms like low mortgage rates – but there are still ways to make it work even if you don’t qualify for the lowest rates available on the market today! By shopping around for different lenders, putting more money down upfront, considering an adjustable-rate mortgage (ARM), and taking advantage of government programs designed specifically for first-time buyers, anyone can get closer towards achieving their dream of owning their own home!  Good luck!