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What Higher Mortgage Interest Rates Mean For Sellers?

What Higher Mortgage Interest Rates Mean For Sellers?

What Higher Mortgage Interest Rates Mean For Sellers?

Mortgage interest rates are at 14-year highs as of the writing of this article.  For many buyers that means the monthly payments are too high for their budgets to handle based on current home pricing.  With this market shift it means that buyers are now in control versus the past where the sellers called the shots.  With fewer buyers on the market the sellers need to figure out how to aim their home at the buyers who are ready to buy.

How Is A Mortgage Payment Calculated?

In most cases when home buyers are looking for a home, they are considering the amount they will be paying monthly for a particular home.  Monthly budgets by home buyer consider what they spend on car payments, food payments, utility bills, entertainment, and housing expenses.  Home buyers want to keep their expenditure outflows less than their income inflows in order to avoid racking up expensive debt.  Mortgage lenders calculate the pre-approval amount based on the debt-to-income ratio of the buyer to determine how much home they can afford.  So while a pre-approval letter may say a home buyer can buy up to a $500,000 home, the buyer will buy based on what the monthly payment of principal, interest, insurance and taxes will be and how that payment fits within their budget.

A $500,000 mortgage with a 3% interest rate and 20% down payment results in a $1686 dollar a month payment not including taxes and insurance.  With that same $500,000 mortgage, 20% down and a 7% interest rate the payment...

Buying Real Estate With Cash

Buying Real Estate With Cash

Buying Real Estate With Cash

There can be many advantages to buying real estate with cash.  Whether you are buying a home to live in or buying real estate to invest in cash offers grab the seller’s attention.  Buying with cash allows the buyer to save time and close quicker on the purchase if that is what they want to do.  With fewer contingencies a cash offer can be more competitive than a higher priced financed offer.  Learn more about how to use cash to buy investment real estate or buy a home in this article.

Where To Get The Cash

If you happen to have enough cash savings to cover your purchase, then perfect.  Make an offer based on the cash in a readily accessible bank account.  Sellers will want to see proof of funds which means providing a copy of a bank statement showing the required amount of cash based on the offer price.  Even in brokerage accounts where the value of the stock is greater than the offer price can serve as proof of funds for making a cash offer.  Most of the stocks on the NASDAQ and NYSE are readily tradeable and the owner can usually sell their shares quickly in order to raise cash.

Cash that will be coming from Home Equity Line of Credit Loans (HELOC) or some other personal lines of credit (LOC) generally can be easily accessed assuming those accounts are current.  If a buyer needs to apply for the HELOC or the personal LOC then the seller may not be as convinced about the ability of the buyer to make the purchase.  Buyers wanting to use cash from their equity or personal LOC should have applied...

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