It’s no secret that mortgage interest rates have been going up over the last few months, and that economists forecast future hikes through the summer. Now seriously, money has been so cheap to borrow, it was practically free! So, it’s not that surprising that rates would go up. I mean, we all knew it was just a matter of time.

Although it hasn’t seemed like it has affected our local Santa Cruz County real estate market, indicators are slowly starting to show some adjustments in certain pockets. Bottom line, changes in mortgage rates and real estate markets are inevitable and happening.

I asked my favorite lenders what they are doing to help their clients stay calm and keep their heads in the game as serious buyers.

Here’s what they had to say…

According to Jean Adams with Cross Country Mortgage, your credit score is more important now than ever. Excellent credit will offer a better price in interest rate and a much lower mortgage insurance premium if you’re looking for a low-down payment loan. For tips on improving your credit score, read my recent article Credit Is Everything.

 She also mentioned an exciting program they are offering at Cross Country Mortgage for borrowers that are seriously looking but afraid of rising interest rates. It’s called “LOCK Before You Look” and it gives a pre-approved buyer the option to lock an interest rate for up to 90 days! This could ease some anxiety and provide a level of security for the buyer actively looking at homes. Contact Jean at 408-250-4550 for more information.

Dimitri Timm with Guaranteed Rate Mortgage had these tips:

1. Buyers with good reserves (savings) should think about paying 1-2 points to buy down their interest rate to help lower their payments. (1 point is equal to 1% of the loan amount).

2.  Make sure they are working with a seasoned lender who has lots of options for Jumbo loans (loan amounts over the conforming limit of $970,800) and knows to look at this option, as jumbo rates are currently pricing out better than conforming loans.  

3. If and when the market starts to shift, sellers could start helping buyers get their rate lower with seller concessions when needed (refer to #1 above). A $10,000 to $20,000 seller credit is better than a major price reduction for the seller, and it makes the loan more affordable to the buyer. It’s a win-win! Contact Dimitri at 831-239-4163 for more information.

And finally, Ryan Buckholdt with Cross Country Mortgage shared these strategies:

1. Right now, rates on a JUMBO 7/1 ARM loan (that’s a loan that’s fixed for 7 years, then adjusts) is about a ½ a percent better than a 30-year fixed. So, if you’re not buying your forever home, consider an adjustable-rate product.

2. Borrowers can now use ADU income which allows the borrower to qualify for more home based on the higher income.

3. I (Ryan) am currently doing my first seller credit to buy down the rate. We can even use it to buy out the mortgage insurance to keep overall payments lower. (I think we will see more of this in the future)

4. I am having clients pay off auto loans or credit cards to qualify for more. Working with clients on debt strategy.

5. Apple employees who do not want to sell stock for the down payment can borrow money against the stock (called a margin loan) for the down and not have to pay the capital gains. For more information call Ryan at 831-818-2339.

When there is talk of “crazy market” and “rising interest rates”, please know that my colleagues and I don’t panic about the headlines or buy in to the “bad news”. We are in the business of doing everything we can to find solutions to whatever challenges you face and to help you achieve your real estate dreams! Please reach out to any of us to explore your personal situation, and to find out how we can help!