While dramatically low mortgage rates have allowed many first-time home buyers this year, rates have already risen and experts expect them to continue to rise in 2022. Higher interest rates will increase monthly mortgage payments and budgets for the 48 percent of Las Vegas homebuyers who have saved on a new home for one to three years.
In the midst of a still competitive Las Vegas seller market, when does it make sense for a family to shop?
Understanding your mortgage options is the best place to start. Here are three tips to help you find the right mortgage for your family:
1. Prioritize pre-approval for a mortgage
If you are a serious homebuyer, the first thing to do is to get a mortgage. Pre-approvals take a few more steps, but they give buyers more confidence in their purchasing power and can help set a buyer’s offer apart from competing offers. This is especially valuable right now as it gives buyers the flexibility to quickly switch to properties they love.
2. Decide between adjustable rate and fixed rate mortgages
The type of mortgage that is best for you may depend on how long you plan to live in the house. If you think you’ll be moving in a few years’ time, an adjustable rate mortgage (ARM) instead of a fixed rate mortgage could result in more savings.
3. Watch interest rates amid changing demand
Lower interest rates motivate more buyers to enter the market and current homeowners to refinance. But even with low interest rates, access to financing can be made more difficult due to stricter credit guidelines and additional documentation requirements. Many lenders, especially some of the larger banks, require a credit score of at least 680 and a down payment of at least 20 percent.
Professional type: Use a mortgage calculator to evaluate how much money a 20 percent down payment will save you over time.
Nadia Aziz is General Manager, Home Loans at Opendoor.