By Kelly Overgard, Mortgage Loan Officer, NMLS #1610871
With over 36 years in the mortgage industry, I believe I have seen it all, but I’ve never talked to clients about interest rates as much as I have in the past six months. In fact, I think the conversations I’ve had since January 1st equate to the other 35 ½ years combined.
The exceptionally low rates over the past few years were not normal. To keep the housing market moving during the pandemic, the government intentionally kept rates extremely low. That was not sustainable and was a major factor in the shocking increase in values. The sharp increase in rates in the past six months have caused a different type of volatility and is tipping the scales away from the hot seller’s market.
Higher interest rates, in addition to lack of affordable housing, mean some people dropped out of the home buying process altogether. They’ve decided to continue renting even though, in the past three years, (according to The Washington Post) the average rent in Scott County increased 6.5% yearly. Those increases are staggering on the already high average rent of $1,400 a month.
Do not despair Prior Lake residents; get back in the game and keep shopping. We have more inventory (houses for sale) coming on the market at a faster pace than we’ve seen since before the pandemic. Historically, most families want to move before or soon after school starts in the fall. That makes the next few months a great time to buy and sell.
As a buyer, if you base your price range on the payment you can afford along with the funds you have available, you can buy in any rate environment. You must be willing to adjust your expectations up or down based on those factors.
That leads me to my new favorite quote, “Date the rate, marry the house.” It means if you can afford the home and want to commit to it, please do it and do not wait! Smart homeowners can always look for better financing opportunities and refinance when the time is right. You can change your financing to more favorable terms later should better rates and products become available. And if the rates get worse and rent prices continue to go up, you will be so glad you married the house when you did.
Unless you are in a rent control program, it is almost guaranteed your rent will go up. One of the biggest benefits of homeownership is protecting your family from rising housing costs (rents). You do not want to price yourself out of affordable rent. When you own a home, you are in more control. Another benefit of homeownership is your increasing value which builds equity and creates future opportunities.
Let’s put more positive energy back into the Prior Lake housing market with a new chant of “Date the rate, marry the house!”
For more information call 952-913-7797, email kelly@kevnikmortgage.com or visit the website www.kevnikmortgage.com/kelly-overgard
*Kevnik Mortgage is an Equal Housing Lender located at 16180 Hastings Ave SE #301, Prior Lake, MN 55372.
