We talk to Shane Hoffman about interest rates, financing, and inflation.
Today we are talking with Shane Hofmann from Edina Realty Mortgage, and we’re sitting in a model home on McKenna Road in Prior Lake. Why are we in this model? As you may know, inventory is incredibly low in our current market, and many buyers are looking toward new construction as an alternative. If you’re looking to buy, you might need financing, and that’s why we want to talk to Shane about some common financing questions.
“I wouldn’t be shocked to see rates at 4.5% by the end of the year.'”
How will interest rates affect buyers?
This is a complicated topic, so I’ll try and keep it simple. Not long ago, we were sitting at 3.25% rates. Now, we’re sitting at around 4%. On a $350,000 home, this increase will raise your monthly payment by $150 every month. In this example, to have the same monthly payment as before, you could only buy a $320,000 home. That’s a significant loss in buying power from only a small increase in rates.
Unfortunately, this isn’t something we can control, but it is the reality of the market. No one knows what the future of the market will be, but it seems like rates will continue to rise. I wouldn’t be shocked to see rates at 4.5% by the end of the year.
How can buyers remain competitive if they need financing to purchase a home?
At Edina Realty Mortgage, we have a program called the buyer advantage. We double-check your finances, and you receive a full commitment letter instead of a typical pre-approval letter. This is a stronger seal of approval, and sellers will take notice. Importantly, if you do this program, you can lock in your rate for 90 days, so you won’t have to worry about them increasing while you shop.
If you have any questions for Shane, don’t hesitate to reach out to him via phone or email. Also, please call or email us with any real estate questions. We are always happy to help!