If you read our last blog, then you know that the Fed just raised interest rates by .25%. So what implications does this have for home buyers? Aside from the fact that this could be a prediction of rising rates in 2017, it does have an immediate effect on buyers in escrow and those looking to buy in the new year.
From the time Donal Trump was elected until now, we've been watching these rates closely and have seen a .5% overall increase during this time. Since the Fed cited inflation concerns, this could mean that we'll be seeing a continual rise in interest rates.
For those closing escrow before the new year, lock in your interest rates now while they are still relatively low. The sticker shock of this raise may seem alarming and may initially make you rethink your purchase, but, emotions aside, current rates are still very favorable.
Those home buyers currently shopping the market should not fear. You are still getting in at a good time. If you're serious about buying, set a deadline now for when you'd like to be closing escrow and work backwards from that. Sit down with your lender and review your options before 2017.
If you're just beginning the process and not already aware, lenders evaluate your (DTI) debt-to-income ratio and that ratio cannot exceed 43%. While a raise in rates does in in turn push this ratio higher, it is not as high as you may think. This raise only adds 1% to your DTI and you can offset this by paying off credit cards.
As we've mentioned, November to December is the best time to buy for a number of reasons and, now, securing a decent rate is another motivating factor. If you're considering buying, the sooner you can make the move the better.
Author:Kurt Galitski DRE 01348644 Phone: 714-957-6677 Dated: December 20th 2016 Views: 37 About Kurt: After 15 years of founding and running a successful boutique real estate office in Costa Mesa as a l...
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