With the most recent Bank of Canada rate hikes, along with the rising gas and food costs, we’ve already started to see an impact on mortgage payments and equity for many.
As rates continue to rise until inflation is relaxed, many homeowners will face higher variable and fixed rates at renewal, higher monthly payments this year and even a drop in property value. Fortunately, Pineapple is here to help guide you through these changes by presenting solutions and opportunities in a rising rate environment for those looking to sell or refinance.
Let’s take a quick look at some of these solutions today.
Switching/Refinancing Has Lower Break Penalties Today
Break penalties are unusually low right now compared to last year. So even if you are with a lender with a high break fee (yes, some have 3x higher penalties than others), now is an excellent time to break your mortgage and refinance or switch to a product with better prepayment penalties. Why? Because when the rates start to come back down in the future, you’ll be in a product with the lowest break fee so that you can move into that lower rate without paying an exorbitant fee.
Consider Cash Offers Even If Lower
Many appraisals are coming back under value right now. This can delay your closing and even kill your deal if the buyer doesn’t have extra money to make up for the shortfall. In this environment, it might be worth accepting a cash offer even if it’s lower than the highest financed offer, giving you some peace of mind the transaction will close on time.
Keep An Eye On The Listings In Your Area
If there’s a lot of inventory in your area, you might want to wait and see how fast homes are selling and at what price point. That way, when you put your home on the market, you can avoid overpricing your property, ensuring a quick sale.
Focus On Repairs Vs Improvements
With the market stabilizing and the buying frenzy settling, sellers are more likely to receive offers closer to their listing price vs. $100,000 over asking. Costly improvements may not get you the return on your investment as they once did before, so save the effort and focus on the repairs that will make your house more attractive than the other listings in your area.
Sell First And Then Buy
As mentioned, many appraisals are coming back undervalued. Waiting to buy after you sell can help ensure you are not caught off guard if your transaction falls through or if you receive less than you are anticipating.
Ready to learn more?
A Pineapple mortgage broker can help you put a mortgage strategy in place that will securely position you for the future, no matter if the rates are rising or falling. Let’s get started; contact us today.