Are you researching the purchase of a new custom Florida home and worrying that higher interest rates might strain your home-buying budget? It’s a valid concern.
Interest rates have been all over the place as the Federal Reserve System battles inflation, slowly decreasing from highs near 8 percent in 2023 to slightly north of 6.5 percent more recently.
Higher interest rates naturally mean higher monthly mortgage payments. Since most of us buy our homes via mortgages (aka home loans), the Federal Reserve’s stance on interest rates is an important consideration.
Does that mean pausing a home purchase until interest rates decrease a bit more? The simple answer is no. Delaying building valuable equity in what is, for most of us, our largest fixed asset, actually costs you money. It also leaves you vulnerable to rates creeping back up instead of down.
Buying now helps you begin building equity (or ownership) in your new custom Florida home. If interest rates drop significantly later on, you can refinance the remainder of your mortgage and potentially realize big savings.
Here’s how to do this.
Do your financial homework
Banish the mortgage-rate fear by attacking it head-on.
Start by getting approved (not pre-approved) for a home loan. Eliminate as much debt as possible, and prioritize saving for a down payment (20 percent of your home’s final purchase price is the industry standard). That 20-percent down payment also saves you the additional expense of buying private mortgage insurance, which your mortgage broker will require.
But don’t let that figure stop you from buying or building you new custom Florida home, especially if the rest of your financial house is in good order. Talk to your ICI Homes sales associate and mortgage lender about the possibility of a smaller down payment.
Make a decision
Wishing and hoping can cost you time and money.
This is another reason you should get approved, rather than merely pre-approved, for a mortgage. Completing that process ahead of time allows you to set your budget and be able to quickly calculate how current interest rates might affect it.
Do this by listing your projected future monthly income versus monthly bills which include your projected mortgage payment. Seeing the results will provide clarity either way.
Choose wisely
Stick to your preset home-buying budget. It’s easy to be wowed by model homes and the upper end of your mortgage lender’s approval limit.
Sticking to your budget does two things — you don’t get distracted by homes that might not make sense for your budget, thus saving you time.
Also choose a new custom Florida home that works for your present life stage. If you’re weary of roommates and landlords, a new 1,600-square-foot, single-family home or low-maintenance townhome might sound like a dream! It will be, because you’re building valuable equity rather than continuing to hope for lower interest rates and pay rent instead of yourself!
Ready for your new custom Florida home? Talk to ICI Homes here.
Higher interest rates naturally mean higher monthly mortgage payments. Since most of us buy our homes via mortgages (aka home loans), the Federal Reserve’s stance on interest rates is an important consideration.
