Many people fret the rising tide of interest rates. Youll hear things like, Did I miss the boat? Is it too expensive now to buy a home? How can I afford the house of my dreams? Maybe I should wait! Maybe I should just rent for a while! Maybe the rates will go down in a few weeks.

Stop! Nonsense, I say!

I bought my first home at close to 9%. Buyers from the 80s told me I was getting in at a bargain, and anyway, who cares? I dont. I refinanced long, long, long ago. 9% is just a part of history now.

So, heres 5 important points you need to keep in mind, when the ebb and flow of interest rates, ebbs up, more than it flows down

1. Theres no better time, then NOW!

2. Long Term Investing

3. Creative Financing

4. Uncreative Financing

5. Buying a Home when Rates go Down

1. Theres no better time, then NOW!:

I know it sounds clich, but its true. Theres no better time to buy, then now. Why?

a) Because if rates are going up, then the law of supply and demand insists that the rising price of homes will likely slow down.

b) Since appreciation slows down when rates go up, this is an opportunity to buy at a perceived discount

c) Remember, rates fluctuate, and nothings forever. So, its more important to get your darned foot in the door, right now. You can always refinance later, as rates ebb and flow back down. Youll still have the benefit of having gotten into the house, at a lower, discounted price, and you can then enjoy both a low rate when you refinance, alongside knowing that you got the house when prices slowed down, maximizing the gain when appreciation revs back up again.

See what I mean? Dont wait. It only gets more expensive. Theres always, no better time, then NOW!

2. Long Term Investing:

If this is your first home, then you have to think beyond the next year or so, and move your frame of reference into a longer futuristic point of view.

a) Are you going to live in the same house, for at least 5 years?

b) Most of us would answer yes, therefore, you need to be more concerned with real estate in the long term, lets say beyond 5 years, and you need to be less concerned with the short term rise and fall of rates. Youll drive yourself nuts otherwise.

c) 5 years is a pretty solid range of time, for rates to go both up, and down. In other words, history proves that for the most part, youll live through the ebb and flow of rising and falling rates, as a homeowner, and you know what? Youll survive; in fact, youll thrive, because youll enjoy a net gain in appreciation over the long term.

So rates go up and down in the short term, but in the long term, real estate always appreciates, and that means that homeowners always win.

3. Creative Financing:

This is the good stuff. When rates go up, opportunities abound. You see, many homeowners, builders, and developers, find themselves in more negotiable positions because of the laws of supply and demand. Surplus rises, and buyers slow down.

a) If financing is an issue, then you may be able to negotiate with the owner to carry the note, and completely bypass more conventional lending institutions.

b) If affordability is an issue, then perhaps youll find many more re-sales out there, perhaps fixer-uppers, ready to negotiate for a lower price (Can you say, built in equity?)

c) If discounts and incentives are your game, then perhaps youll locate some developers anxious to move inventory, with a flare for adding a rebate, or doing youre landscaping, or building that retaining wall you wanted.

The key here (and this is very important), is to find an excellent real estate agent. I cant stress enough, how important it is to have someone on your side, who understands the lay of the land. Dont go at it alone. Just go find someone knowledgeable, who you can trust, and who is ready and willing to roll up their sleeves, and go to work for you.

4. Uncreative Financing:

As of the writing of this article, rates are still very, very low. Anything below 7%, for a fixed rate, in my opinion, is totally workable.

a) Between 1979 and 1990, fixed interest rates ranged from 11% to 16% on average. This is highly unusual historically, of course, but it is an excellent benchmark, when you evaluate how good, or bad, things are right now.

b) So as youre exploring your choices, dont lose sight of the big picture. Getting your foot in the door is more valuable, then being left out in the cold.

c) One other important point. For all those homeowners that purchased in the 80s, do you think theyre terribly concerned now about the ebb and flow of rates? Do you think they kept their 11% fixed rate loan, or do you think they refinanced when it dropped down to 6% (or paid the house off by now). Id venture a guess, that virtually all of them; have a nice, hefty, bulky, attractive pot of equity sitting on their front porch step today.

5. Buying a Home when Rates Go Down:

When rates go down, of course, its obvious that getting a loan and buying a house is extremely attractive.

a) But when rates go down, there is a lack of homes on inventory.

b) Can you say, Non-negotiable, or bidding war, or oops, sorryAlready sold!

c) When rates go down, the seller is in the drivers seat, and the buyer is running around with checkbook in hand, yelling Where do I sign?

Keep that in mind. Which would you prefer? Personally, I dislike high rates, but I LOVE being in the drivers seat. I guess in the end, youve just got to work with whatever environment exists today. Any way you look at it, you cant stop and wait until the cards stack up in your favor. You just have to dive in, and get started. If you like to be creative, if you like opportunities, and if you like to be in the drivers seat then rising rates shouldnt bother you in the slightest. Renting is more of a crime to your finances, in the long run.

Weve enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.

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