It is evident that rising mortgage rates have defined the housing market in 2022. With rising interest rates, it has also become more costly to purchase a home. The National Association of Realtors (NAR) reports that:

“Compared to one year ago, the monthly mortgage payment rose to $1,944 from $1,265, an increase of 53.7%.”

If you're thinking about buying a home or have recently tried, that's a significant increase in your monthly mortgage payment - and it may be causing you to put your plans on hold. This increase makes homes less affordable, particularly when compared to the previous two years, when mortgage rates were at historic lows.

The good news is that you can navigate today's housing market and rising interest rate environment by following a few simple guidelines. Here are three things you should think about to help you achieve your homeownership goals.

1. Expand Your Search Area and Criteria

If you've been looking for a home in the city center or a specific area that's becoming out of your price range, you might want to consider looking a little further out in a location that may be more affordable. Extending your search area or re-prioritizing the items on your wish list can lead to unexpected opportunities, allowing you to afford more of what you need (and want) in a home. As CNET points out:

“Area growth is likely to keep pace with the market, which means that the outskirts of town might be hopping within five years. Consider stepping out of your ideal location by searching in the nearby cities. You may find better prices and more square footage.”

2. Explore Alternative Financing Options

Working with a trusted lender to learn about the different loan types and options is essential too. According to Nerd Wallet:

“A variety of mortgages are available with varying down payment and eligibility requirements.”

When it comes to exploring ways to find the best home loan for your situation, experts know where to point you. With rising mortgage rates making it more expensive to finance a home today, your loan officer may be able to introduce you to an ideal option. Over the life of your loan, this could make a home purchase more affordable and within your financial reach.

3. Look for Grants, Gift Funds, and Down Payment Assistance

There are also numerous options for obtaining the funds required to purchase a home. Downpaymentresource.com is an excellent resource to investigate. When it comes to taking your first step toward homeownership, looking for specific down payment assistance options in your local community could be a game changer. According to NAR:

“Many local governments and non-profit organizations offer down-payment assistance grants and loans, targeted to area borrowers and often with specific borrower requirements.”

There are also programs and special benefits for people who work in specific professions or have special status, such as teachers, doctors, nurses, and veterans.

Ultimately, this means that you have a wide range of federal, state, and local programs to choose from. Connecting with a local real estate professional and your lender is the best way to learn more about what's available in your area.

Bottom Line

Let's connect if you've been looking for a home but have been putting it off due to rising costs. Having a team of local advisors on your side may be exactly what you need to steer your search in a new and more affordable direction.