Mortgage interest rates are skyrocketing. What financial professionals say clients should do.

Sarah Ponchek, Financial Advisor, UBS Private Wealth Management, said: Timing the real estate market is as difficult as timing the stock market because the housing market is much less liquid. So the best time to buy a home is when you feel ready and can afford it. The first thing you should do is look in the mirror and seriously ask yourself, “How much can I afford to pay for a house each month?” Taxes, insurance premiums, maintenance costs, and anything else that may qualify as household expenses should be taken into consideration. A good rule of thumb is that you don’t want to spend more than 20% to 30% of your pre-tax income on housing. Realize that you may not be able to afford the dream home you could have bought last year. But as difficult as this is, it’s best not to try to time your purchases.

Nina Mitchell, Senior Wealth Advisor at The Colony Group said: Depending on the value of the home and the amount of the loan, jumbo rates are preferred over matched loans because the 30-year jumbo rate is about 1% lower than the rate on matched loans. Banks want to keep these jumbo loans on the books, making the rates very competitive. The qualifying loan limit is just over $647,000. Usually people want to reduce their debt as much as possible. But if you do the math, it might actually cost less to borrow a little more when interest rates are low. You can then use those extra funds for closing costs, or you can pay the principal a few months after closing.

Also, variable rate mortgages are back in vogue. His current 7-year jumbo ARM is about 4.75%. This is 1% lower than the 30 year jumbo. Also, most people don’t hold their mortgage for more than nine or ten years. They usually refinance it. So, based on the facts and circumstances, this lower rate would allow him to do 7 years of ARM and expect to re-sign in his next 7 years. This is another way to lock in a lower rate based on today’s environment.

Another option, this depends on your family dynamics, is to take out a loan from your family or family trust. You must ensure that you are using the lowest applicable federal tax rate set by the IRS. Its interest rate is significantly lower than the bank interest rate.

Kenneth Van Leeuwen Van Leeuwen and Company Managing Director: If the client still wants to buy, we are looking at all the different options to determine the best way to get the client into the property based on the overall financial plan. Everything was fixed for 30 or 15 years. We are currently looking at different options such as variable rate and interest only mortgages. For young people and couples, we are asking if there are sources they can tap into for a larger down payment. We are telling you to go back and save a little more money if you can because there is no. Also the markets in certain locations are quieter and not as crazy bidding as they used to be. I recommend checking with your client if it’s a home and if it will sell for $480,000. We encourage them to be a little more aggressive in bidding.

Jamie Hopkins Carson Group, Managing Partner of Wealth Solutions: You will pay the mortgage company $X to reduce the interest rate on your mortgage. Part of that is analyzing whether you have enough cash to do it. For example, if your monthly budget is capped at $2,000, putting in extra money will help you stay within that budget. I also think that reducing the size of the house is a good idea for many people. The idea is that you can be happy in a small house. It’s cheaper, easier to maintain, and more cost-effective in terms of heating and cooling, and all that goes with it. I think the high cost of borrowing will drive that a bit.

Lauren Sigman, Wealth Advisor, Robertson Stevens: I’m not going to say outright, “Oh, the interest rates are high, don’t buy now.” It’s a general question. First and foremost, a home is an asset to use, not an asset to invest in. So ask your client why they want to move to a new house. Then look at your balance sheet and cash flow and see what you can do without squeezing your remaining savings goals. can do. If your house is already fixed and you’re 10 minutes closer to your child’s school, does a $50 higher monthly mortgage payment really make that much of a difference? You can refinance it if it goes down.I also tell people to get A good mortgage broker to consider for various loan programs.

If you have an adjustable interest rate loan, recalculating your loan can reduce your monthly payments. Let’s say you have a $100,000 variable rate mortgage that went from 4% to 6%. You can pay enough to reduce your monthly payments or keep the same amount even if interest rates rise.

Nicky Savage, Wealth Advisor at Sequoia Financial said: I encourage clients looking to buy a home now to look at their long-term plans and weigh the pros and cons of the market they see. tend to be different. They may want to compare the costs of renting and buying in the local market.

one situation Taking out a variable rate mortgage right now can be especially complicated. There are so many things floating around about what interest rates will be in the next year or two. In general, if you’re on a variable rate mortgage, I think it’s time to revisit your long-term plans. If you plan to stay in your home for the next 10 years or more, it may be time to reconsider refinancing to avoid significantly higher interest rates that could go down the pipeline. You can refinance it again.

Editor’s Note: Answers have been edited for length and clarity.

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