When Interest Rates Rise.....many people fall out of the house buying market.
This is a mistake. Many of the best mortgages deals become available when
lenders are competing for new business and sellers are competing within a
smaller buyer pool. You just have to know how to keep the costs down in order to
counter the higher interest rates.
One of the best tricks is the buy-down. In a buy-down, a fee is paid at
the closing to get a lower interest rate. In a soft market, an anxious seller
may be lured into to paying all or part of the buy-down. Another approach is to
get the seller to pay some of closing costs, thus lowering the amount of cash a
buyer needs to close. Frequently the seller's costs can be used as a write-off
by the buyer (Check with your tax advisor.).
If the market is softening due to rising or higher rates, the price
itself becomes an area where a buyer may be able to save a lot of money on a
house through some hard negotiating. Lower prices mean lower loan amounts, so
don't be discouraged by higher rates--use them to your advantage.