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Buying Power Goes Down as Rates Increase

Don’t get stuck in this situation when you buy new construction.


John Keats once said, “Nothing becomes real until it is experienced.” With that quote in mind, let’s talk about an actual real estate story that will help you make good decisions when you go to buy new construction.

We recently had a client who was under contract on a new construction home. When starting a new construction purchase, we typically talk about interest rates and the final cost. Once our client’s home was almost complete, we revisited this conversation. Rates went up while her home was being completed, so her payment increased by nearly $1,100.

Your buying power at 3.5%  is radically different than it is at 5.5%. If you were thinking about simply waiting out this rise in rates, you might want to think again. Most lenders expect interest rates to reach 7% by the end of the year. Some lenders offer an extended rate policy on new construction, allowing you to lock in today’s rate for up to 12 months.

If you have any questions, don’t hesitate to reach out to us by phone or email. We look forward to hearing from you.

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