Prequalified buyers- get your approvals updated. Why? Rates skyrocketed.
So you tried to be an informed and responsible home shopper and you have obtained a prequalification or pre-approval from a lender a few weeks back. Great! Definitely a completely necessary step in any home buying process. BUT….. get your preapprovals updated!
Rates skyrocketed over the last few weeks. The pre-approval in your hand may not be worth anymore than the paper it’s printed on. Hopefully you worked with a lender who padded your figures a bit, including using a higher than market interest rate to calculate your home buying power. But, if your lender tried to squeeze you into a pre-approval because you really wanted to hit a certain price point, you may be in trouble.
Understanding the complexity of why rates skyrocketed may not be what the average home buyer in interested in learning. But knowing where the interest markets are trending should be a priority.
Let’s say that your loan officer told you that you could not have a principal and interest payment a penny over $1400. Not a problem! Or so you thought when you received your prequalification back in late April. But are you shopping for the right price point now?
If we use the data reported by FreddieMac as our hypothetical figures:
|Loan: $300,000 30 Yr Fixed Rate Mortgage|
|Principal and Interest at 3.5%||1347.13|
|Principal and Interest at 4%||1432.25|
Oh, Oh, now you are over budget!
That means you will need to get your approval updated to meet the reality that rates did skyrocketed.
Only Solution: Borrow less! I know, not the happy answer that anyone looking for the perfect property but it’s the reality. You will either need to come up with a larger down payment or purchase a less expensive home.
The market is much more volatile both in rates and trending home prices then it once was. This is why it’s even more important that you are an informed consumer working with a lender that will guide you through the changes.
Have you been out there “window” shopping on your own? Stop! You might be pouring unnecessary hours into a search that will never give you viable results.
Contact me for a FREE consultation and for a referral to a Realtor who is an expert in the local real estate market.