If you're in the market to buy a home, it's important to understand how interest rates will affect your purchase. In this video, San Diego Realtor Katy Carlson will discuss how the 2022 interest rates will impact your plans and give you some tips on what to do next.

Hi, my name is Katy Carlson, and I'm with Whissel Realty. Today I want to talk about interest rates. In 2022, we have seen a considerable spike in interest rates. This is true. Let's rewind a little bit and look at what we're now calling the COVID years.

This is when interest rates were really low, 2-3%. Buyers that found their homes and have interest rates at 2-3% are likely very happy. However, there was also something a little bit more unhealthy happening because there were so many buyers excited to get in there and get in at that interest rate. And we were seeing offers go through without contingencies which are in place to protect you as a buyer. Homes were going for well over asking or market price.

And so while there is a beauty in shopping when interest rates are low, there's also a beauty in shopping when interest rates are a little bit higher. Let's fast forward to now. The buyer pool is considerably smaller. That's a good thing for you because not only can we negotiate the price, we can have the contingencies in place, but we can also ask for things such as closing costs. Let's talk about the rate specifically. In real estate, we have a saying, and it's super cheesy, fair warning. You "marry the home and date the rate." So even though interest rates are a little bit higher right now, you can always refinance down the road. So let's say interest rates are six and next year they're going to be five, get it while it's six, refinance when it's five because when interest rates come down on their own, all of those buyers that have hit pause are going to get back in the game.

You want to beat them to the punch. Now, if you're thinking, well that doesn't do me any good right now, interest rates are still high. I get it. You want to make sure that you can afford your monthly payment. We have options. There are a couple different ways to tackle that high interest rate right here, right now. And one of those options is the A.R.M., adjustable rate mortgage. This is automatically going to come with a lower interest rate. There are two numbers involved, and there are a couple different options. There's the 3/1, the 5/5. Let me tell you what those numbers mean.

The first number is how long you get that lower rate for, and the second number is how often that rate readjusts. So there is a little bit of risk involved, but basically what you're trying to do here is buy yourself time, because if you choose an A.R.M., you still have the option to refinance when the rates do come down. So that's a fantastic option. Another one is, and I love this for VA buyers, specifically, anybody can use it, is the 2-1 buydown. This is where you pay money to get your rate lower. It doesn't make a ton of sense for you to pay money to lower your rate, but what if I told you I could get the seller to pay that for you? One of the beautiful things about purchasing a home when the market is a little bit slower is that we have room to ask for things like this.

So if we can get the seller to help buy down that rate for the first year, again, let's go back to this 6%. If the rate is 6%, in your first year, you'll pay 4%. On the second year, you'll pay 5%. And again, this bought you two years to locate when the rates come down, when you can, again, refinance. So all of this to say is that this is a beautiful time to buy a home. Get in there before all of the buyers come back into the market. And if you need a little bit of help figuring out how to lower your rate, let's see if any of these options work for you. You can call me, text me anytime.

San Diego Featured Listings

See More Listings

See More Listings