Don't let fear stop you from taking advantage of an opportunity.
With the rising mortgage rates, buyers have been feeling the squeeze and deciding they may be pushed out of the home buying market. This is an understandable feeling as the news media is flooded with articles about rising rates and the fear of a recession.
But you have to filter out the noise and think logically rather than be affected by the fear.
Rates will continue to rise as the Fed tries to prevent a recession. So the logical thing to do is to lock in rates before they continue to go higher. Don't be stuck in fear mode and do nothing, rather take action while others are stuck in their own minds. Find a solution to that fear of the rising rate and recession.
The answer may be an ARM (Adjustable Rate Mortgage) and it has been around for years. And it is increasing in popularity since the spring when the rates started to dramatically rise as is indicated in the article below.
An ARM has an initial lower introductory rate period, followed by an adjustable balance for the remaining term of the loan. The introductory rate depends on the product: 5, 7, 10, 15 years and anything in between. The lower rates can translate into lower monthly payments and keep the buyer in the market rather than being priced out. Talk to a qualified lender about the details.
The rates are continuing to rise, so there are many buyers who are stuck in fear mode and unable to make any decision. That means less offers coming into the average home on market, which means those sellers are willing to negotiate better terms and prices. A perfect opportunity to negotiate prices and also get lower rates than the conventional fixed rate loans. Then before the introductory rate expires, re-finance at a future date to further bring down the rate while you would have built equity in the meanwhile. A win-win situation.
And for those who fear that if a recession comes, they may last longer than the introductory rate period. Don't fear.
The average duration of a recession has been about 15 months since 1900. And we had many recessions since then. History tells us you will not need to worry. Neither the Great Depression nor Great Recession lasted long enough to impact a 5 year ARM.
As the saying goes: the only thing you have to fear is fear itself. Don't let fear prevent you for exploiting an opportunity from which you can benefit.