* You’ll learn why a rising Fed Funds rate doesn’t necessarily mean rising mortgage rates.
* The main determinants of buying a home.
* Where we are in the property market cycle.
* You can always refinance. You can never change the purchase price of your home.
Fed Chair Janet Yellen has signaled her crew will be raising rates by 2016. As a result, you are hearing everybody from real estate brokers to market pundits in the media say, “Buy now before it’s too late!” There’s nothing like a little Fear Of Missing Out to get people to make big decisions without thoroughly thinking things through.
The instant response everybody should have when fed this line is: Don’t higher interest rates make homes less affordable at the margin? If homes are less affordable, doesn’t that hurt property demand? And if demand for property declines, doesn’t that mean prices might go down instead?
Whenever you are talking to someone whose main source of income is through transactions, be a little suspicious. After all, from a real estate broker’s point of view, it’s always a good time to buy or sell!
This post aims to explain how to think about a home purchase (or sale) in a rising interest rate environment. We’ve already discovered how to invest and potentially profit in the stock market when rates rise.
My hope is that this post educates future homebuyers, reduces the number of future debt welchers, and creates a stronger America as a result!