Exploring Creative Ways to Save Money as Home Prices & Mortgage Rates Increase
With home prices around the Twin Cities on an upswing and mortgage rates also climbing, exploring creative ways to offset some of the rising borrowing costs might not be a bad idea if you’re planning to buy a home or condo sometime in 2017.
Although it of course requires a bit more money upfront, one tactic worth consideration that can save you money over the long haul is paying a fee to the lender at the beginning of your loan term. Essentially what you’d be doing is buying down the interest rate, which means you’d be paying less interest over the course of the loan, effectively saving you money despite having to fork over more upfront costs.
Asking the seller to pay the closing costs might also allow you to stretch your budget a bit further, although that might be tough to negotiate during such a strong sellers’ market. But with mortgage rates on the rise, we could start to see somewhat of a slowdown, which means sellers could be more flexible on their price or be willing to accept a creative offer than involves paying the closing costs in order to get a deal done.
Recent projections have home prices around the U.S. increasing by about 3% in 2017, which is down from the 6.5% jump we saw in 2016. If you combine what will be a nearly 10% increase in home prices from the beginning of 2016 to the end of 2017 with rising mortgage rates, which are also expected to keep climbing in 2017, and affordability starts to become a major issue for many would-be buyers. It's for those reasons alone that the National Association of Realtors expects home sales to only increase by 2% this year, which would be down from 15% over the first 11 months of 2016.