Written by:
Josh Devylder
Loan Originator
NMLS: 2214086
First Option Mortgage
View Josh’s Bio

Soaring mortgage rates have sent shivers down the spines of many aspiring homeowners. But before you write off your dream house, hold on! While securing a low-interest loan might seem like a distant dream, the current market presents a unique opportunity: seller concessions.

With demand for homes still strong, buyers hold more leverage than you might think. Sellers, eager to move their properties in this competitive landscape, are increasingly willing to sweeten the deal with concessions that can significantly offset the sting of high rates.

Here’s how you can play the market to your advantage:

Forget about squeezing the seller on price. In this market, your power lies in negotiating concessions that can bring down your overall costs and make homeownership more affordable. Think of it as adding value beyond just the price tag.

What kind of concessions can you negotiate?

  • Closing cost coverage: This can be a game-changer, as closing costs can add up to thousands of dollars. Negotiate for the seller to cover all or a portion of these expenses, freeing up your cash for other priorities.

  • Rate buydowns: Sellers can offer to buy down your interest rate for a set period, lowering your monthly payments and making the initial years more manageable.

  • Home warranties or repairs: Convince the seller to include a home warranty or address necessary repairs before closing, giving you peace of mind and potentially saving you money down the line.

  • Prepaid expenses: Negotiate for the seller to cover prepaid expenses like property taxes or HOA fees, providing immediate financial relief.

Remember: While high rates might be the headline, the current market offers unique opportunities for savvy buyers. By focusing on seller concessions, you can potentially offset the impact of high rates and secure a home that fits your budget and dreams.

Yeah, but, Rates Are High So Shouldn’t I Rent for a Bit Longer Until Rates Come Down?

If you are currently renting and keeping an eye on mortgage rates, the idea of buying a house right now might seem like financial insanity. “Why lock myself into a hefty monthly payment when I can just rent and keep my options open?” you might think. But before you resign yourself to the treadmill of rent checks, consider a powerful concept: opportunity cost.

Opportunity cost is the potential benefit you forgo by choosing one option over another. In the housing game, renting comes with a hefty opportunity cost, one that might surprise you in the face of high interest rates.

Here’s the reality:

  • Rent is Rising, Too: While mortgage rates might grab the headlines, rent prices are also on a relentless upward climb. In many areas, rents are outpacing inflation and even outstripping mortgage payments with high interest rates. This means your “flexible” rent is actually costing you more and more every year, with no chance of building equity or long-term security.

  • Time is Money: Every month you rent, you’re essentially throwing money away. That monthly payment doesn’t build equity. It doesn’t appreciate in value. It simply disappears into the landlord’s pocket. Owning a home, on the other hand, turns your monthly payment into an investment. A portion of each payment goes towards building equity, increasing your net worth and creating a valuable asset you can leverage in the future.

  • Stability in a Stormy Market: High interest rates might be scary, but they’re also a signal of potential market volatility. In such times, owning a home offers a safe haven. Your monthly payment remains predictable, unlike rent which can fluctuate at the landlord’s whim. Owning a home also protects you from the domino effect of rising housing costs, ensuring you’re not caught in a bidding war every time your lease expires.

So, what does this mean for you?

Don’t let high interest rates blind you to the bigger picture. While they might increase your initial costs, the opportunity cost of renting can quickly outweigh that in the long run. With rents rising steadily and homeownership offering stability and equity-building potential, buying a house might just be the smarter move, even in a challenging market.

Tax implications

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Don’t let the fear of rates hold you back from exploring your options. Consider your opportunity cost, embrace the power of negotiation, and turn this market to your advantage!

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