UNDERSTANDING REAL ESTATE AND INTEREST RATES

Lenders, whether government-backed or private, compete for home buyer businesses in a free and dynamic market. This drives up or lowers average monthly interest rates for mortgage loans.

Based on correct housing prices, tighter credit requirements, and a decreasing surplus of unsold houses, the average interest rates on 30-year fixed mortgages have remained close to historic lows between 2013 and 2022, but have started rising in 2022. However, they are still at historically low levels.

Rising mortgage interest rates do not cause anxiety. Knowledge of the topic can help ease any fears. Housing market participants must be able to comprehend rising mortgage rates as they have an impact on every aspect of purchasing a home.

Rising Interest Rates and Homebuyers

The conventional wisdom in real estate is that higher interest rates can make selling or buying a house more difficult. Conversely, decreasing interest rates can make selling and buying a home easier.

Johnny Home Buyer would want a 4% interest rate on a 30-year fixed-rate mortgage on a $400,000 home. His monthly mortgage payment would then be $1,900. Johnny would pay $2,138 if he was eligible for a 5% fixed rate on a 30-year mortgage. Johnny’s monthly payment would rise by $238 if he has a 1% interest rate increase. This is roughly 13%. What does this all mean for homebuyers

A home buyer sees affordability decreasing as mortgage rates rise. Johnny Home Buyer is looking to get a $400,000 mortgage at 4.4% interest. However, based on his qualifications, the lenders are unable to offer him a loan of $355,000 because he has not met all requirements. Johnny’s purchasing power is reduced by $45,000 for every 1% increase in mortgage rates.

Johnny Home Buyer could have “qualified” for the $400,000 mortgage he desired before the Great Recession. This was during peak subprime mortgage madness.

To sweeten the deal, a subprime lender could have offered Johnny a 2% adjustable rate of interest for the first five years. Johnny will be responsible for at least 7 percent interest after five years. If interest rates rise, Johnny may have to pay more.

Sellers and rising interest rates

Sellers are also affected by rising mortgage rates, but in a different way. Jill may list her home for $400,000 if she wants to sell her house. Jill’s house is now only available to buyers who can afford it at $355,000 due to rising interest rates.

Indisputable, Jill can still make a profit from the sale. However, a 1% increase on mortgage rates reduces Jill’s market value by approximately $45,000.

How well she plays the markets will determine her profit. In essence, interest rates could rise rapidly and cause housing prices to crash.

Rising Interest Rates and Property Value

Homebuyers and sellers can notice the impact of rising interest rates. Hypothetical scenarios show that housing prices and property values directly correlate with mortgage rates. However, the economic health is what drives both of these scenarios.

Rising mortgage rates won’t have as much of an impact on housing prices and property values if the economy is growing fast enough. If mortgage rates rise one point, monthly payments will increase by $238. However, strong economies allow employers to raise salaries enough to compensate.

A rise in interest rates shouldn’t paralyze the housing market as long as the economy is growing and there are job growth and wage growth.

Rising interest rates and real estate investing

The impact of rising mortgage rates on real estate investment can be beneficial. Because fewer people are eligible for mortgages, the rental market will grow. However, rising interest rates can reduce prices so it is sometimes better to purchase during an increasing interest rate environment.

Furthermore, lending standards will become more strict as interest rates rise. This will result in fewer real property transactions. Renting properties will become more important until people can afford mortgages. An investor could make a fortune by investing 1% more in the right market for housing.

Do you want to buy or sell?

It is not a bad idea to buy a home when mortgage interest rates rise. Historical data shows that a mortgage rate of 5% is still very low. A mortgage with a fixed rate for 30 years is much cheaper than historical rates, according to data from Freddie Mac.

Since 2009, the average annual 30-year fixed mortgage rate has not exceeded 5%. The average mortgage rate at the beginning of the Great Recession, 2006 was 6.411%. In 1996, the average mortgage interest was 7.81%. Ten years earlier, in 1986, it was 10.9%.

What happens to mortgages when interest rates rise?

Mortgages are more expensive when interest rates rise. This is because the mortgage interest rate also increases. It becomes more expensive for homeowners to buy a home. The demand for homes decreases when they are more expensive. This causes a decline in the housing market. To attract buyers, sellers reduce the prices of their homes.

Are rising interest rates good for mortgage companies?

Companies that lend money to home buyers are rewarded with rising interest rates. A bank or mortgage company that earns more interest for a higher interest rate will be able to pay more. This leads to higher bank revenues. However, mortgage companies may be affected if they have to charge too much for mortgages.

What is better: Lower closing costs or lower interest rates?

It is up to you to calculate the numbers and work out which option is best. The best option for your home purchase is one that results in a lower total cost. This would typically be lower interest rates since you will be paying that interest rate for a longer time if your home is not refinanced. This could result in lower monthly mortgage payments and lower interest rates.

The bottom line

Buyers are encouraged by interest rates remaining at historic lows. Today’s market is home to some of the lowest debt that a homeowner will be able to acquire in the market.

The most important thing is to get the right advice from an experienced real estate agent professional who has sold many properties for others. Potential investors will feel more confident, knowledgeable, and secure in their financial decisions when working with an expert.

Call Full Potential Real Estate, LLC now if you are looking to buy a home in Myrtle Beach.

Full Potential Real Estate, LLC
Myrtle Beach, SC 29577
843-492-4537
https://fullpotentialrealestate.com

TIPS TO MAKE DOWNSIZING EASIER FOR SENIORS

Most seniors are aware that there will come a time when they need to downsize to cut costs, simplify their way of life, be closer to their grandkids, or to deal with their medical needs. It is usually a stressful process, both physically and emotionally. However, it does not have to be too overwhelming. Here are a few tips from expert real estate agents to make downsizing easier for seniors.

Downsizing Guide For Seniors

Start Early

Give yourself a lot of time for this particular process since it will take much longer that you initially thought. Take your time. Avoid sorting through your whole house in just a single day or over the weekend. A few weeks to about a month is more realistic. Deal with one room at a time and don’t forget to take breaks throughout. Downsizing will be less stressful if you are not rushing through things.

Start Small

You most likely have a few things in mind to get rid of in the garage or kitchen. However, avoid sorting through such a big room right from the start. You have a lot of things that you may have accumulated over the years and this will take some time to go through. Begin in a room with little emotional attachment and understand your needs. This will make the process a lot easier.

Eliminate Rooms You Won’t Have In Your New Home

If you are buying a home or a condo, you may not have an office space or a garage. Almost everything in these spaces will have to donated, sold, relocated, or tossed.

Get Rid Of Duplicates

You will find this true especially in your kitchen. You have at least two spatulas, a few oversized stock pots, and more. Now is the perfect time to get rid of the clutter.

Only Yes or No, No Maybes

If you are going through years of possessions, there are things that will tug at your heartstrings and you will be tempted to make a third pile for things that you can keep if you have enough space. Don’t be tempted. You will wind up with a Maybe pile that will be bigger than your Yes or No piles. Check every item and determine if you use it all the time or not. If yes then keep it if not then get rid of it. There’s no room for maybes. Only bring what you need to your new Myrtle Beach home.

Sell Your Things

Facebook, Craigslist, and yard sales are only some of the ways for you to sell your things. You most likely won’t make a lot of cash on most items, so think about how much time you would like to invest. For instance, yard sales tend to be faster but for cheaper prices while Facebook offers a wider audience.

Give Yourself Some Time To Reminisce

While you are sorting and cleaning, there will be a few days when you would like to stop emptying the bedroom of the kids drawings, trophies, and toys. You can pause and allow the nostalgia to take over for a bit.

If you need help in searching for your new home, call Full Potential Real Estate right away. Need help sorting, packing and getting rid of your things? Contact Brunswick Organizing Solutions.

Full Potential Real Estate, LLC
Myrtle Beach, SC 29577
843-492-4537
https://fullpotentialrealestate.com

7 IMPORTANT PRACTICES WHEN DEALING WITH A REAL ESTATE AGENT

When it comes to buying a home or property, who do you call to ask for help? Most people think that real estate agents are at your beck and call, but what they do not realize is that being a real estate agent is another story.

One client wondered why she got yelled at when she called an agent. She knew there was nothing wrong with asking for information regarding a home for sale. But clients should understand that there are certain rules and etiquette policies when dealing with real estate agents.

Do not be misguided but these agents enjoy working with people, however, there are customers who would cross the line at one point. To help you out, here are a few guidelines to remember when dealing with Myrtle Beach real estate agents.

Best Practices When Dealing With A Real Estate Agent

1. They work on a commission basis

You have to understand that only a few Myrtle Beach realtors work on a salary basis. Most of them work and paid on commission– if they fail to close a deal, they don’t get paid. Remember that these agents do not work for free. So better make sure that you really need a real estate agent before you start looking for one.

1. Always be on time

For real estate agents, time is money. Be considerate and always be on time when you have an appointment with them. Do not expect these agents to drop everything and show you a house. If you are running late, at least be courteous enough to call and advise of your expected time to arrive.

1. Pick a real estate professional

Make a decision whether you wish to work without representation, transact directly with listing representatives, or if you wish to employ your personal representative. If you make a decision to employ your personal representative, be sure to meet with them prior to hiring them. According to a buyers agent, never try to interview two professionals in the same company.

1. Do not call the listing representative if you are dealing with a purchasing representative

Listing agents help the vendor, not the customer. If you work with the listing representative to represent you, that representative will certainly be working on two agencies. If a listing representative shows you the house, expect that they will represent you. Listing representatives do not intend to do the buyers agents’ work. Let your buyers’ agent do the work.

1. Sign a contract or agreement prior to working with a real estate agent

Full Potential Real Estate, LLC, suggests signing an agreement to safeguard both parties. It develops a connection between you as well as the representative. This agreement also clarifies the responsibilities of each party. Do not forget to inquire about the distinction between an Exclusive and Non-Exclusive Purchaser’s Broker Arrangement.

If you are not all set to authorize with a buyer’s broker, do not ask that representative to show you houses, or else, an acquiring clause could appear.

1. Never authorize forms you do not understand

Do not ever think that it is foolish to ask questions. It is the real estate representative’s duty to answer questions. It is natural that they can easily understand what’s written in forms, but to you, it may seem unfamiliar.

One piece of advice from professionals, never sign contracts or agreements that you have not read nor understood.

1. Be prepared to buy

If you typically are not all set to buy, you do not require a real estate agent. You can just go to open houses and ask a listing representative for showings. Let them know instantly that you still on the lookout for a new home.

Just in case, you can bring your checkbook with you, just in case a down payment is needed.

If you are looking for honest and reliable real estate agents, always call Full Potential Real Estate, LLC in Myrtle Beach.

Full Potential Real Estate, LLC
Myrtle Beach, SC 29577
843-492-4537
https://fullpotentialrealestate.com