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June 28, 2013

Interest Rates Rise, Time to Update Your Loan Preapproval

There will be plenty of buyers attending open houses this weekend, despite a predicted lack of new inventory as we head into a holiday week. Some of you may have been recently preapproved for a loan. Others may have completed the process a month or two ago.

The big news this past week is that interest rates have increased significantly. If you’re about to write an offer, I recommend you contact your lender to revisit what your monthly payments will look like in conjunction with the latest interest rates. You may have been quoted 3.5% for a 30-year fixed loan a while back, but now you may be looking at upwards of 5% in today’s market.

And while that news may not make you happy, you may be pleased to know that the rise in interest rates may level the playing field where overbidding on properties is concerned. Yes, there are many cash buyers floating around. But a majority of buyers will be obtaining loans and may be concerned about not taking on more mortgage debt than they can handle.

Bottom line? Check out the details with your lender before you commit to a purchase price on a property.

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