Interest Rates Are Up — So What Now?

Hey hey North Texas! If you’ve been thinking about buying a home in the Dallas-Fort Worth area, you’ve probably heard the same thing over and over:

“Interest rates are up.”

And yes, mortgage rates can have a big impact on your monthly payment. But higher rates don’t automatically mean you should put your home search on hold.

What does today’s market mean for you?

Higher Rates Change the Numbers — Not Necessarily the Plan

When mortgage rates rise, the cost of borrowing money increases. That means the same-priced home can have a higher monthly payment than it would have at a lower interest rate.

For some DFW buyers, that means adjusting the price range.

For others, it may mean changing the loan program, increasing the down payment, negotiating with the seller, or looking at nearby communities where their budget may go further.

For example, a buyer priced out of one part of Frisco or Plano may decide to explore McKinney, Allen, Celina, The Colony, or Lewisville. A buyer looking west of Dallas may compare Fort Worth, Hurst, Bedford, Euless, Keller, North Richland Hills, Burleson, or Mansfield.

The point is that a higher rate may change the strategy without ending the home search.

The DFW Market Is Not One Single Market

One of the biggest mistakes buyers make is treating the entire Dallas-Fort Worth metroplex like one market.

It isn’t.

Conditions can vary dramatically from one city, neighborhood, and price range to another.

A home in Southlake or Colleyville may face very different buyer demand than a home in Mesquite, Garland, Royse City, Burleson, or Grand Prairie.

Even within Dallas and Fort Worth, market conditions can vary from neighborhood to neighborhood.

That’s why local market knowledge matters.

The question isn’t simply:

“Are homes selling in DFW?”

The better question is:

“What is happening with homes in my price range, in the areas I’m actually considering?”

Higher Rates Can Mean Less Competition

One possible side effect of higher mortgage rates is that some buyers step away from the market.

That can create opportunities for buyers who remain active.

In certain Dallas-Fort Worth communities, that may mean fewer bidding wars, longer days on market, or sellers who are more willing to negotiate.

Depending on the property and seller, buyers may be able to negotiate:

• Sales price

• Seller-paid closing costs

• Repairs

• Home warranties

• Closing dates

• Interest-rate buydowns

A buyer looking in Irving, Arlington, Hurst, Bedford, Mansfield, Rockwall, Garland, or North Richland Hills may sometimes find more negotiating room than during a heavily competitive market.

Every property is different, but negotiating power matters.

Ask About Seller Concessions

This is one of the most important conversations Dallas-Fort Worth buyers should be having right now.

Depending on the loan program and transaction, a seller may be able to contribute toward certain buyer closing costs.

Those funds may help reduce the cash you need at closing or potentially be used toward an interest-rate buydown.

Instead of only asking:

“How much can I get the seller to lower the price?”

It may be worth asking:

“Where can the seller’s money help me the most?”

Sometimes a price reduction is the best option.

Sometimes closing-cost assistance is more valuable.

Sometimes buying down the interest rate creates a larger monthly benefit.

This can be especially important in areas where sellers are competing with new construction, including parts of Celina, Frisco, McKinney, Mansfield, Burleson, Royse City, Rockwall, and other growing DFW suburbs.

Remember: Your Interest Rate Isn’t the Purchase Price

There is an important difference between the price you pay for a home and the interest rate attached to your mortgage.

The purchase price becomes part of your transaction permanently.

Your mortgage, however, may change later.

If mortgage rates decrease in the future and you qualify, refinancing may become an option.

Refinancing is never guaranteed, and there are costs involved, so you should never buy a home based solely on the assumption that you’ll refinance later.

But it is one reason DFW buyers shouldn’t look at today’s mortgage rate as the only factor in a long-term homeownership decision.

Don’t Try to Perfectly Time the Dallas-Fort Worth Market

Trying to buy at the absolute lowest home price and get the absolute lowest mortgage rate at exactly the same time sounds ideal.

In reality, nobody knows exactly when either one will happen.

If rates drop significantly, more buyers may enter the market.

That can increase competition in popular areas such as Frisco, Plano, McKinney, Grapevine, Coppell, Flower Mound, Southlake, Keller, and Mansfield.

More competition can mean:

• More multiple-offer situations

• Fewer seller concessions

• Less negotiating leverage

• Faster-moving listings

That doesn’t mean you should rush to buy.

It simply means waiting has its own risks, just like buying does.

Focus on the Monthly Payment

Instead of beginning with:

“What price home can I get approved for?”

Start with:

“What monthly housing payment am I comfortable making?”

Those are two different questions.

A lender may approve you for an amount that technically works according to lending guidelines. That doesn’t necessarily mean you want that payment every month.

For DFW homeowners, the monthly cost of ownership may include:

• Principal and interest

• Property taxes

• Homeowners insurance

• HOA dues

• Utilities

• Maintenance

• Repairs

• Lawn care

• Future improvements

Property taxes and insurance can also vary significantly across North Texas, which makes looking at the full monthly payment especially important.

A $400,000 home in one DFW community may have a noticeably different monthly cost than a similarly priced home somewhere else.

Your Loan Matters Almost as Much as the House

Not every mortgage is structured the same way.

Depending on your situation, you may qualify for:

• Conventional financing

• FHA financing

• VA financing

• USDA financing

• Down-payment-assistance programs

• Other financing options

For veterans and active-duty buyers using a VA loan in Dallas-Fort Worth, for example, the right financing strategy can make a major difference in upfront costs and monthly affordability.

This is why speaking with a knowledgeable lender before falling in love with a house is so important.

A good lender should be able to show you multiple scenarios so you can compare the numbers rather than simply telling you the maximum amount you qualify for.

Should You Buy a Home in Dallas-Fort Worth Right Now?

There isn’t one answer that works for everyone.

You may be in a good position to buy if:

• You have stable income.

• You’re comfortable with the monthly payment.

• You have adequate savings after closing.

• You plan to stay in the home long enough for buying to make sense.

• You find a property that fits your needs.

• The numbers work without relying on everything going perfectly later.

You may decide to wait if buying would drain your savings, stretch your monthly budget too far, or require you to depend on a future refinance just to make the payment affordable.

The goal isn’t simply to buy a house.

The goal is to buy the right home, in the right DFW community, with financing you understand and a monthly payment you can comfortably live with.

Looking for a Home in Dallas-Fort Worth?

Whether you’re considering Dallas, Fort Worth, Irving, Arlington, Frisco, Plano, Mansfield, Grapevine, Hurst, Bedford, Keller, Burleson, McKinney, Rockwall, Royse City, Garland, Mesquite, Grand Prairie, Coppell, Euless, Flower Mound, Lewisville, Carrollton, The Colony, North Richland Hills, Southlake, Colleyville, Celina, or another North Texas community, the first step should be understanding your numbers.

Before deciding whether now is the right time to buy, let’s look at:

• Your target monthly payment

• Your preferred communities

• Current homes for sale

• Seller negotiating opportunities

• Closing-cost strategies

• Financing options

• Potential rate-buydown opportunities

The Dallas-Fort Worth housing market is too large and too diverse for one headline about interest rates to tell the whole story.

The right strategy depends on your situation. If you ever have any questions or want to strategize a real estate move call, text, or email me. Answered questions are the best questions. Im here to help you accomplish your real estate goals from the beginning to beyond closing.Straightforward advice. Strong advocacy. Real results.

Edmund Ponikiewski
Serving Dallas-Fort Worth and surrounding North Texas communities
EdmundTheRealtor.com

It’s not just a transaction, It’s building a relationship.

 

 

Whether you’re looking in Dallas, Fort Worth, Irving, Arlington, Frisco, Plano, Mansfield, Grapevine, Hurst, Bedford, Keller, Burleson, McKinney, Lewisville, Rockwall, Royse City, Grand Prairie, Mesquite, Garland, Carrollton, Coppell, Euless, Flower Mound, The Colony, North Richland Hills, Southlake, Colleyville, Celina, or another DFW community, the better question is: