As we roll into the New Year, many things are uncertain about what’s to come in 2023. With interest rates on the rise, competition staying fierce, and a slowdown in the real estate market, many are choosing to sit it out and see what happens. There is a good likelihood that it will be harder to get financing in 2023 and that it will be more expensive to boot. So if you know that the next year will inevitably require you to switch homes, then now is the time to pull the trigger. These are four good reasons to obtain a mortgage before New Year’s.
Interest Rates Might Be Higher, But They are Still Low
It is hard to see the interest rates rise since we have become accustomed to historically low ones. Over the past several years, money has pretty much seemed like it’s free. Never before have you been able to borrow and pay nearly nothing to do so. But if you think back just a decade or two ago, interest rates were around 7-9%. So even though they are inching up right now, they are still relatively low, which is why now is the time to pull the trigger just in case they go way up.
Rent is Going to Increase
With the cost of living going up, so too does the cost of renting. If you are renting right now, then you are throwing money out the window without building equity. As rent goes up, the more you will be throwing away. If you plan to buy even though interest rates are going up, at least the money that you spend monthly will go toward building something that you have for your financial future. And if you are looking to invest in a rental property, now is an ideal time to consider it. Right now, buying a commercial building or single-family rental home is a great way to build multi-stream income.
Mortgages are Going to be More Difficult to Obtain
As the cost of living and interest rates rise, people’s take-home pay isn’t going to stretch as far as it used to. Since traditional mortgages are based on a ratio of what goes out versus what comes in monthly, if everything costs more that ratio is going to tighten. Therefore, getting a mortgage in 2023 might be more difficult than it is right now. Although no one has a crystal ball, there are ways to predict what will probably happen in the upcoming year, and it’s likely that obtaining a mortgage might be harder.
There are Always Non-QM Loans
Even if you are worried that you aren’t in a situation right now where you can qualify for a traditional mortgage, the good news is that you might not have to. Not all mortgages are traditional, and non-QM loans have different criteria to meet to be approved. So it might not make sense to sit on the sidelines waiting for a time when you have saved enough or have built up your credit history. By the time you do, you might be paying much more for a home than you need to.
As we roll into 2023, not many people can predict what the housing market will do. If history is any indicator, however, with the cost of living and interest rates on the rise, money will likely become harder to get. In that case, over the lifetime of a mortgage at a higher interest rate, you will be paying more. It is much better to deal with the devil you know than the devil you don’t. Interest rates are very unlikely to be lower either way, so now is the time to pull the trigger if you are even considering buying a new home in 2023. Contact us today to discuss how we can get you the mortgage you need to start the New Year off right.