The real estate market has changed over the past year. One of the biggest
issues facing anyone considering a home purchase or sale is rising interest
rates. After enjoying years of mortgage rates in the 2-3% range, many
borrowers are shocked to see a conventional 30-year fixed loan offering
rates as high as 7 percent.
While historically reasonable, this increase is
having an impact on the real estate market. If you are considering a move,
it’s important to remember that your lifestyle still needs to take precedence
over these temporary changes.
First, your mortgage interest rate is just one aspect of your overall financial
situation. Taking a more holistic view of the potential move, including
lifestyle and personal needs, may provide a more favorable picture.
example, if the move is a downsize, what is the savings in loan amount
(less expensive home), maintenance and repair costs, utility costs, property
taxes, etc.? One must also consider the potential tax deduction difference
that mortgage interest might provide.
Another important consideration is that property values may have dropped
in some areas as rates have increased. While one may not completely
balance the other, it can make the increase more palatable. Additionally,
rates fluctuate and if interest rates decrease, you might have the option to
refinance down the road. Meanwhile, home values have historically been a
great vehicle for wealth building as values rise over time.
Finally, and most importantly, if your lifestyle has changed and you want to
move, then that should be your priority. Quality of life is the single most
important aspect of health. While rising interest rates may change your
decision, it should not keep you from moving if that’s what’s best.