How Rising Interest Rates Impact Your Homebuying Power

Interest rates are one of the most important factors to consider when buying a home. They directly influence how much you’ll pay each month on your mortgage and, ultimately, how much home you can afford. When rates rise, it can affect your budget and decision-making process, so understanding their impact is essential.

What Are Interest Rates and Why Do They Matter?

Interest rates represent the cost of borrowing money from a lender. They determine how much you’ll pay in addition to the loan’s principal amount. Even small changes in rates can have a significant impact on your total borrowing costs over the life of the loan, which is why it’s important to pay close attention to market trends.

The Effect of Rising Rates

When interest rates go up, the cost of financing a home increases. This means that for the same budget, you may be able to afford less house than when rates were lower. Rising rates can also influence the housing market overall, often leading to fewer buyers competing for properties. While this can create opportunities for buyers, it also requires careful budgeting to ensure affordability.

How to Prepare for Higher Rates

Get Pre-Approved: Securing pre-approval from a lender helps you understand what you can afford and gives you an opportunity to lock in a rate, protecting you from future increases during your home search.
Explore Loan Options: Some buyers may consider adjustable-rate mortgages (ARMs) or other loan products to manage costs in the short term.
Focus on Your Budget: As rates rise, it’s important to evaluate what you’re comfortable spending and avoid stretching your finances. Prioritize long-term affordability over immediate desires.

A Balanced Perspective

While rising interest rates can feel like a challenge, they may also slow the pace of home price increases and reduce competition. This can create opportunities for buyers who are ready to make a move.

Greg Sandler

Author Bio: Greg Sandler
Greg Sandler is a distinguished leader and strategist in the mortgage and real estate investment industry. With over two decades of experience, Greg has honed his expertise in guiding his clients to build wealth through real estate.

Greg Sandler has direct and first-hand experience as co-founder and CEO of USA Investment Group Management Inc., focusing on growing real estate holdings and diversified asset portfolios. Under Greg's guidance, the company has executed hundreds of traditional real estate acquisitions and currently manages a substantial portfolio of rental units.

Greg also has a track record of driving multi-million-dollar revenues and leading high-performing teams to success in mortgage loan originations, achieving the prestigious "Top 1% Originator" status in consecutive years. Currently steering the helm as the President at USALending.AI in Keller, TX, Greg has revitalized this division of a mortgage bank, significantly expanding the company's scale.

Prior to this, Greg's role as Senior Vice President at Fairway Independent Mortgage Corp in Rocklin, CA, was marked by his pivotal contribution in establishing the company's presence in northern California and northern Nevada. Under Greg's leadership, his team of nearly 110 dedicated mortgage professionals originated and funded approximately $800 million in residential mortgages annually.

Greg's professional journey is marked by his exceptional skills in negotiation, sales leadership, financial analysis, and P&L management. His ability to strategize, coupled with his in-depth knowledge of the mortgage and real estate sectors, makes him a visionary leader and a respected figure in the industry.

To book a call with Greg Sandler, please visit: www.calendly.com/greg-sandler