As a lot of the articles here have gone into lately, we have been discussing rising interest rates a lot and how this can have a negative impact on the market and how you can make decisions in order to combat these rising rates. Now to take the other side of the argument, we are going to look at reasons and the Positives For 2017 Rising Interest Rates. Now when most people talk about rising interest rates, their first assumption is always to assume this is bad for everyone and no good can be had from it. Here we are going to look into 4 reasons why rising interest rates just might be good for people and it might shed some light on a topic that most feel is a dark cloud looming overhead. You may be surprised with some of the reasons that we are going into and how we can spin a negative into a positive and prepare you for the future.
If there is a positive that can come from rising interest and mortgage rates, it is the fact that they might be more willing to make a deal with you considering applications are slowing down as well as purchases and refinances. If there is a noticeable way to see lending institutions be flexible in their lender overlays, or their additional requirements above program guidelines, it is by affecting their profits. With the down turn in applications and loan closings, mortgage companies might be open to allowing for more loans to get approval and close in a time where loans are slowing down. Another item you might see from lenders is their offer to keep your rates low by eating into their own profits. Yes, they may be reducing their profits, but if they keep their volume up they should be fine when navigating a time where loans are slowing down. This can be a definite positive for those borrowers who have great credit and more than adequate down payments. Lenders will know that those borrowers can go anywhere, so it is in the borrower’s best interest to force the lender’s hands for the best rates.
It is a little known fact of FHA, VA, and USDA loans and it is the fact that these mortgages are some of the few loans that are assumable. What this means if you are selling your home and you have one of the government insured mortgages, the perspective borrowers can take over your existing mortgage if they qualify for the terms of the loan. What this means is only people who can qualify for a VA Loan are able to get a VA Loan as you are not going to see people who aren’t military veterans get approve to assume this mortgage. If we witness a market that sees mortgage rates increase past 5% and you are sitting on a mortgage that is assumable and in the 3’d or 4’s, you will find yourself with a very desirable mortgage and you will have a definite position of power as a seller in this transaction.
Another of the Positives For 2017 Rising Interest Rates is that it acts as a jump-start for decisions to be made in the real estate market. If you are in a negotiation to purchase a home and the seller sees that the mortgage rates are on the rise, they should understand that any potential buyers could at any moment get cold feet and pull out of the ongoing negotiation. If you are a seller caught in a transaction where it is not a true seller’s market, then you need to be aware of the surrounding market conditions and you may decide to speed along the process by accepting an offer sooner than later. You may think you are not getting the best deal possible, but taking a deal is a lot better than holding out and seeing potential borrowers walk away as they get scared off by rising mortgage rates. If you are a potential buyer of a home during this market, you can use this philosophy to your advantage and make sure you bring up that by not taking your offer or countering it to make a sale, there is a risk of losing the deal all together and being stuck with a mortgage going forward and in a house you don’t want to be in.
The last of the Positives For 2017 Rising Interest Rates doesn’t necessarily have to involve the real estate market and mortgage industry, but more so it shows a well-being of the economy. When interest rates are rising and the fed wants to increase interest rates it is normally to fight the risk of inflation but it also means that there is an improvement in consumer activity. When you think that most parts of the economy are based on consumer spending, this can be seen as a positive for the economy that interest rates are rising.
Even though there are Positives For 2017 Rising Interest Rates, this doesn’t mean you should stand on the sidelines and be afraid to get into the game so to speak. You need to think out your actions accordingly and make sure you are prepared for any other the scenarios which may come your way. Always remember to do your homework when it comes to mortgages as well. You can take a bad time like rising interest rates and flip it into a positive by assuming an attractive mortgage or using market conditions to benefit your negotiation for a home. If you’d like some expert advice, you need to reach out today and we can customize a plan for you and how we will go about making it happen. If you are interested in purchasing or refinancing a home in the near future, then you need to reach out today at 888-900-1020. We look forward to hearing from you!