Rising Interest rate, Should I still buy or keep saving?

Question

Good day everyone,

So I'm primed to buy my next deal, I already have a pre-qualification letter in hand. The thing that concerns me is the rising interest rates. I've heard both sides and that some people say that we are still historically low when it comes to interest rates. I Understand that but the home prices continue to go up along with the rising interest rates. Can anyone elaborate to see if it prudent to just stay put and save or buy my next deal. All input would be appreciated!!!

Account Closed · Answer

@patrice Penda, thanks for the reply. I understand that If I buy residential I can lock in a fixed rate but the rising interest rate does eat into cashflow.

Patrice Penda · Answer

Hey Account Closed

Like you heard, rates are low and chances are high that they will rise in the near future.Where the rates are at any point in time doesn't matter so long as the numbers make sense in any deal you get into.Like most buyers, if you purchase residential real estate, you should qualify for long-term fixed rate interest. So for the duration of your loan, you should be able to anticipate your mortgage payments and to make projections in line with our objectives.

David Fernandez · Answer

Account Closed, if the deal works for you at today’s rate, go ahead.

There’s no much you can do to increase/decrease the rates, so focus on what you can control which is on finding deals that meet your investing criteria. If the rate goes up, you’ve locked in a loan at a low interest rate (great!). If the rates go down, you can always refi and get a new loan at a lower interest rate.

Good luck!

Account Closed · Answer

Very true, I guess time will tell if these rising interest rates affect sales prices.

Account Closed · Answer

Thanks David, Very true what you said. All in all I guess it's how you buy that makes you the money. It does make it difficult to find deals though. Again thank you for the advice!

Account Closed · Answer

Thanks Ron for the advice. Looking for the long term I know it is wise to not time the market but for the short term cashflow I see the rising interest rates reducing it.

Jason Taliaferro · Answer

Like others have mentioned here rates are still historically low. Deals are about the numbers makingsense so I would still look, run numbers, and see if the deals makes sense. Interest rates are only one aspect of a deal and frankly one aspect you have some control over. For instance I rather buy at a high interest rate than an over inflated price. Why, I can refinance I can't change the pricipal. I am curious to see what rising rates will do to property prices. This coulb be a good thing for investors.

Steve Vaughan · Answer

My first mortgage in '98 was at 7.25%. I was thrilled when they dropped to 6.5 when I started investing in '03. I still have a couple seller financed mortgages at 6 and 6.5% on two apts.

Rates and values are rising.  Always continue to save, but don't let small increases 'up' to the lowest rates we've had in 50 years (instead of 60) throw off your whole plan!

Rising Interest rate, Should I still buy or keep saving?

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