Aloha, friend. The latest news in the world of real estate is that suddenly mortgage rates are rising. Well, at least they’ve risen in the past month, now creeping over 4%-4.25% on average. Mortgages rates nationwide have been at historic lows for quite some time and even now, interest rates are still extremely attractive. Many home shoppers in Hawaii have taken advantage of these low rates to either buy their first house, refinance their existing mortgage or even upgrade to a larger house. Does this include you??
With the sudden spike in interest rates, has the window of opportunity closed? Has your dream of owning a piece of Hawaii real estate disappeared? With the median single family house price teetering around $600,000, even a small upwards tick in mortgage rates can mean hundreds $$$ more per month in mortgage payments. All things being equal, as interest rates rise, your purchasing power decreases. Basic mortgage math.
Is The Home Buying Frenzy On?
If attendance at this weekend’s Hawaii Homebuyers and Homeowners Fair was any indication, there’s still a rush to own a piece of real estate here. Maybe shoppers are trying to lock themselves in before rates climb even higher. Coupled with the continued lack of inventory, higher rates might really be pushing folks to act NOW instead of being forced to the sidelines. Makes sense, doesn’t it?
The thing is, we don’t know if the rise is a blip on the radar or if it’s going to continue into the near future. We just don’t know. But even if they do rise, we’re still at low rates and while you may not get the lowest ever mortgage, you can still get a good deal.
“Expect the recent increase in interest rates to affect the housing market in two ways,” says Brandon Burke of Hawaii Mortgage Central. “First, a rise in interest rates will also cause monthly payments to increase, so we are likely to see the recent trend of overbidding for homes to level off making home purchasing more affordable. Second, the increase in home values caused by the overbidding should help any homeowners recently underwater to refinance their mortgage to a better interest rate than anything available on the market before 2012.”
How Else to Afford a House in Hawaii?
Of course, getting a low mortgage rate is only one way to buy a house in Hawaii and make it affordable. What’s the other? Getting a cheap price!!! How, you ask? Here’s a short list:
- Buy a fixer upper and do the renovations yourself (or hire a handyman). You’ll have less competition for these houses, so try to negotiate a deep discount.
- Buy a house from a motivated seller. Know someone who needs to sell a house? Save them the trouble of marketing their house and offer to buy it directly from them. You’ll save them time and money, meaning they can offer you a bigger discount in return.
- Call “For Rent” signs, ask to speak with the landlord and see if they’d rather sell instead. They may be tired of tenants and would be happy to sell outright to you.
- Get pre-approved for your mortgage and offer a quick closing in exchange for a price reduction. You might save $20,000 or even more by ensuring the seller a smooth and timely sale. Remember — price is not always the most important factor to home sellers.
While home affordability may have taken an unexpected and sudden hit the past month, it’s still no reason why you can’t go find the house of your dreams, or at least upgrade your present situation. But — wait too much longer and you might miss the boat. Good luck!