Darryl Caffee Jr. is senior vice president, director of retail lending and community reinvestment officer for Webster Five Cents Savings Bank in Auburn. Reach him at dcaffee@web5.com.
Updated: October 17, 2022
5 Things
5 Things I know about ... Getting a mortgage in a rising rate environment
By Darryl Caffee Jr.
If you were like many in Central Massachusetts looking to buy a home at the start of the pandemic, you may be among the countless house hunters who were discouraged by the market. Don’t despair because things are changing. The good news is home inventory is improving, meaning your likelihood of finding a home has improved. The bad news is mortgage rates are rising. Here are things to know when getting a mortgage in a rising rate environment like this one.
5) People matter. Real estate is now and has always been a people business. You need to have a team of professionals helping guide you through the home-buying process. Your Realtor, loan officer, and attorney will be your trusted advisors, not only for this transaction, but likely for years to come.
4) Bidding wars are declining. This doesn’t mean your dream home is suddenly available at a discount. But it can mean you’re less likely to come up against the intense competition many prospective homebuyers faced over the past two years.
3) This is not the 2008 housing crisis. Don’t allow the housing crisis of 2008 to cause trepidation. Underwriting standards have been bolstered, which has resulted in some of the most credit-worthy borrowers in mortgage history. This means if your lender has approved you for a mortgage, your lender has evaluated your ability to repay and is confident in your creditworthiness.
2) Mortgages are like going in a convenience store. There are a lot of products to choose from. Product features include fixed rates, adjustable rates, state agency programs, federal programs, grant programs, equity lines, equity loans, and more. Inquire about product variations and ask your trusted advisors to guide you toward the options best suited to your needs and financial position.
1) You’re likely going to refinance your loan. Pre-2020, the average mortgage lasted about seven years. While that number has risen, there are a variety of circumstances that may lead you to refinance your loan, including finding a lower rate, family changes, debt consolidation, and tuition expenses.
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