Changes in mortgage rates have many homebuyers wondering what they can afford and whether now is a good time to buy. Despite higher interest rates, there are many bright spots in the housing market right now. This is especially true for homebuyers looking to buy a new home. It’s important for homebuyers to understand the many available financing options to utilize in today’s housing market.
Take advantage of the opportunities
The rise in interest rates has calmed the frenzied competitive housing market, which had left buyers with fewer options, often leading to highest offers in a fast-paced homebuying process. Today, home price appreciation has stabilized, and there are more homes and neighborhoods to choose from in the housing market. All of this means homebuyers have more options, opportunities, and incentives than they’ve had in many years.
Know your mortgage options
Many buyers, especially younger buyers who have only known historically low rates, may be most familiar with the standard 5-20% down payment and 30-year fixed-rate mortgage. But there are many different mortgage types available that may better fit the buyer’s financial needs.
This table from U.S. Bank illustrates the different options to compare different types of mortgages.
Understand the incentives
Many builders are willing to get creative with incentives in order to help buyers purchase one of their homes. It’s important for buyers to understand what these incentives mean and how they can benefit from them. Extended rate locks, permanent rate buydowns, or closing cost assistance are all incentives that can have significant impacts on your monthly payment.
Tour tip: ask your homebuilder about their financing options or consult a mortgage professional.