Rates Are Changing... Your Homebuying Plans Do Not Have To!

Rates Are Changing...

Your Homebuying Plans Do Not Have To!

Mortgage rates can have a major impact on the homebuying process. When rates rise, it is understandable to wonder how that change could affect your monthly payment, purchasing power, or plans to buy a new home.

At DeNova Homes, we understand that today's rates are an important part of the decision. The good news is that a higher market rate does not necessarily mean you have to put your home search on hold. Depending on the home, financing program, and buyer qualifications, there may be options available to help make the numbers work.

Two options buyers may want to explore are rate buydowns and extended rate protection.

What is a Rate Buydown?

A mortgage rate buydown uses funds to reduce the interest rate on a home loan. Depending on the specific program, a buydown may reduce the rate temporarily or for the life of the loan.

For homebuyers, the potential benefits can include a lower interest rate and lower monthly principal and interest payments. A lower payment may also provide additional purchasing power for qualified buyers.

For some buyers, using an available builder incentive toward eligible financing costs may have a greater impact on their monthly payment than they initially expect. This is why it can be worthwhile to look beyond the purchase price and consider the overall financing options available. 

What is Extended Rate Protection?

Buying a new construction home can mean locking in your purchase well before your home is ready for move-in. During that time, mortgage rates can increase.

Extended rate protection may allow qualified buyers to lock their interest rate for a longer period, providing greater certainty while their new home is being completed. If market rates rise during the eligible lock period, buyers have the benefit of their protected rate, subject to the terms of the program.

What if rates go down? This is where a one-time float down can become especially valuable. With eligible extended rate protection programs, buyers may have an opportunity to float down their locked rate one time if qualifying market rates improve before closing. 

In Simple Terms: Protection if rates rise. Opportunity if they fall.

Program requirements vary, but this feature can give buyers additional flexibility during the time between purchasing their home and closing.

Do Not Let Current Rates Tell The Whole Story!

It is easy to see a mortgage rate in the news and assume that it is exactly what buying a home will look like. In reality, financing can vary based on the buyer, loan type, available incentives, property, timing, lender programs, and other factors.

That is why talking with a lender early in your home search can be so valuable! Understanding your available options can give you a much clearer picture of your potential monthly payment and what you may be able to afford.

At DeNova Homes, our team can connect you with our designated lenders to learn more about current financing opportunities, including available rate buydowns and extended rate protection programs.

*Financing programs, rates, terms, incentives, eligibility requirements, rate locks, float-down options are all subject to change and may vary by community, home, buyer, and lender. Please contact a designated lender for current program details, qualification requirements, restrictions, and availability.