INDIANAPOLIS — Buying a house is tough for some and market changes could make it tougher.
The average 30-year fixed loan in the U.S. closed in on 4% Wednesday.
Who is it affecting?
Some sellers are still seeing 15 or 20 offers on their homes, making things like home inspections optional and prices sky high.
Chad Talpas, a mortgage broker with The Mortgage Exchange, said it is creating a tough time for first-time home buyers.
"In the past, you can get into a home with a little as 3% down. There's even programs USDA, VA, things like that, where you can do 100% financing. It seems to be those offers aren't getting accepted," Talpas said.
In addition to selective sellers, mortgage rates are creeping up to pre-COVID levels. While rates are rising, they are still considered good by industry standards.
"With prices rising so fast, and rates going up, we're running into a little bit of affordability issue," Talpas said.
According to a HomeAdvisor survey, 1-in-4 people would go over budget by $100,000 for a dream home.
What might help?
In a competitive market like this, Talpas said to treat your pre-approval letter like a resume.
"If there's going to be 20 of them (offers), you got to get yours into the final three or four. So, what can we tweak and what can we put on there to make your offer stand out in comparison to somebody else's?"
Second home rate structure changing
If you are looking to get a second home loan, that is going to be more expensive than before because Fannie Mae and Freddie Mac are changing the rules.
Second home mortgage rates used to be about the same as your primary residence.
Now, the rates will be higher.
"Depending on the amount you put down and the credit score, that rate could be close to a percent, percent-and-a-half higher," Talpas said.
For a couple on a fixed budget, that could mean up $100 to $200 dollars more a month.
If you are looking to buy, revisit your budget with the new rates, new rules and homeowner's insurance price increases.
Remember, if you waive a home inspection, that could mean money down the road for repairs.
NOTE: Chad Talpas' Nationwide Multi-State Licensing System and Registry #564051