How to Respond to Rising Mortgage Rates | Viewpoint

“Will interest rates go up?” is one of the most common questions clients ask me. Freddie Mac’s 30-year fixed rate rose to 7.326.94% as of Dec. 6, leaving many homebuyers concerned about whether they can afford their dream home. Despite rising interest rates, this changing market presents new opportunities to achieve your homeownership goals.

While inflation has pushed up costs, the silver lining is that buyers can actually negotiate again. Less demand means home prices are falling and you can get seller incentives, price reductions and final sales below asking price. These changes in the market may allow you to buy a home that was out of reach just a few weeks ago.

To help improve your homebuying ability, mortgage lenders have begun announcing new options in response to current conditions in the market. They work to provide specific mortgage options to meet your unique goals and circumstances. These include programs designed to help you cope with rising interest rates, as well as alternative financing options.

A temporary reduction program can help you lower your interest rate at the outset of your home loan. After financing your new home, there are four options to temporarily lower your interest rate for up to three years.

  • 1-0 Buydown reduces the interest on your loan by 1% for the first year
  • 1-1 Buydown to reduce your loan interest by 1% in Years 1 and 2
  • 2-1 Buydown to reduce the interest rate of 2% in the first year of the loan and 1% in the second year
  • 3-2-1 Buydown to reduce your interest, 3% in 1st year, 2% in 2nd year, 1% in 3rd year

Alternative Financing Methods for Special Situations:

Imagine you’ve found the right house for your growing family, at an affordable price, but it’s a fixed upper. Jumbo Renovation loans allow you to finance up to $1 million above compliance limits with as little as 10% down. This means you can buy a bigger house and turn it into your dream home.

Maybe you’re self-employed and having trouble getting approved for financing. The Extended Bank Statement Program can help you qualify using alternative documents instead of tax returns.

Maybe you’re a successful investor struggling to get a loan without traditional income. You can qualify based on your liquid assets alone—no income required—with Extended Asset Qualification Loans.

Or maybe you’ve tried buying a luxury home through other traditional banks, but didn’t meet their guidelines for large loans. The Expanded Full Doc Program offers unique qualification features that may be right for your financial situation.

Eric Wallberg is the Senior Vice President/Initiating Branch Manager for Cross Country Mortgage in Boca Raton.e-mail