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What You Can Do About Rising Mortgage Rates

What You Can Do About Rising Mortgage Rates

While you can’t control housing inventory or whether interest rates rise or fall, there are several ways you can get a leg-up throughout every step of the homebuying process.

Lock-in your rate: Mortgages come in a wide variety of flavors, some more exotic than others. But in a rising-rate environment, you might want stick with a more “meat and potatoes” approach — the 30- or 15-year fixed. Both lock your interest rate for the duration of the loan (with a 15-year you’ll typically pay a lower rate, but pay more each month). There are a variety of Adjustable Rate Mortgages (ARM) that might offer a low introductory rate, but will adjust to current market rates at a predetermined time in the future (you usually get a fixed rate for a certain time, perhaps five years, and then your rate adjusts every year after that). If rates rise, that means your monthly payment could balloon down the road.

Buy points: You could purchase points, or fees paid up front to lower the interest rate on your loan. Basically, you pay some interest up front in exchange for a lower rate for the duration of the loan.

Work with a real estate agent: A competitive market may not be the best time to DIY. A pro can be very helpful when it comes to navigating the competitive market. The right agent should be an expert in your desired neighborhood, and can even give you a hot-tip about a house that’s about to go on sale before it’s listed. They’ll also tour homes with you and give your brutally honest feedback about prices, structural issues or other red flags.

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