If you're considering selling your Brevard County home, you likely want to ensure that you maximize your sales price and potential profit. If you've recently had your home valued and the estimated
Rising Interest Rates: What It Means for Buyers in Brevard County
Dated: September 2 2022
Inflation is a trend we can't escape. It's everywhere, from the prices in the grocery store to the interest rates of mortgages. The interest rate has been historically low for years now, but as it starts to creep up, the effect can be seen across the real estate market. So what does this mean for buyers in Brevard County? Keep reading to learn more about rising interest rates and how it affects buyers.
Why Is the Interest Rate Increasing?
In an effort to battle inflation, the federal funds rate has increased three times so far this year, rising by 1.5% as of the end of July. Of course, the Fed must balance a need to control inflation with the negative impact such actions have on the economy. Although there is no direct link between the federal funds rate and mortgage rates, when the federal funds rate rises, it often results in higher interest rates across the economy — including mortgage rates. Put simply; a higher federal funds rate typically means a higher mortgage rate for buyers.
Do Interest Rates Affect Loan Amounts?
Yes, interest rates do affect the loan amount a buyer is qualified for. Typically, the higher the interest rate, the lower the loan amount you qualify for. This is because your pre approval amount from lenders is based on how much down payment you're putting down and the total monthly payment you can afford according to your debt-to-income ratio. A higher monthly payment means you will receive approval for a lower loan. This can be particularly problematic for first-time buyers who often don't have the additional down payment to offset a lower loan amount.
Do Higher Interest Rates Mean Lower Property Prices?
In some instances, higher interest rates can lead to lower property prices. However, it's important to remember that changes in property price are very gradual and don't typically happen unless there is a significant shift in demand. For example, although interest rates have risen, the property inventory in Brevard County is still lower than demand, which means a drop in property prices is unlikely.
What Can Buyers Do to Beat Rising Interest Rates?
If you're looking for a home in Brevard County and want to maximize your affordability, there are a couple of things you can do, including:
Paying down your existing debt
Your debt-to-income ratio is the most important factor that lenders consider when determining what loan amount you can afford. Your debt-to-income ratio tells agents how much you earn compared to the amount you must spend to cover required debt payments. If you want to make the biggest impact on your debt-to-income ratio, pay down the debts with the largest monthly payments.
Increase your credit score
A credit score helps give lenders an idea of how you manage your debt and plays a huge part in determining your interest rate. In general, the higher your score, the better your interest rate. To improve your credit score, you should aim to make all of your payments on time and keep a low credit utilization on your existing lines of credit.
Increase Your Down Payment
The larger your down payment amount, the better your interest rate. This is because the lender faces less risk with a higher down payment.
If you're considering buying a house in Brevard County, working with an experienced real estate agent can have benefits that go far beyond simply finding your next home. From helping you negotiate with sellers to guiding you throughout the sales process, having a knowledgeable realtor working on your behalf can make all the difference in your buying experience. Click here to connect with one of our licensed realtors today and learn more about how we can help you make your real estate dreams come true!
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A combination of historically low-interest rates and high buyer demand has seen Brevard County experience an unprecedented seller's market over the past couple of years. However, with the Federal
Inflation is a trend we can't escape. It's everywhere, from the prices in the grocery store to the interest rates of mortgages. The interest rate has been historically low for years now, but as it