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North Texas homebuyers feel the pressure of higher mortgage rates

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Texas Squeeze: A series investigating the high costs of high growth in North Texas.

Mortgage rates are on the rise, ending the lowest levels ever seen in the last few years. Coupled with rising house prices and overall inflation, it’s creating a perfect storm for buyers.

According to Freddie Mac, the average interest rate on 30-year fixed-rate mortgages reached 5% in April for the first time in more than 10 years, and then rose to 5.3% on May 12.

With a 3.11% down payment and a 20% down payment in December, Bankrate estimates that the $ 350,000 home principal and interest was $ 1,197 per month before tax and insurance were deducted.

At 5.3%, the monthly payment for a house of the same price would be $ 1,554. That’s a difference of $ 357 in less than five months.

According to the Texas Real Estate Research Center at Texas A & M University, North Texas homes have average selling prices of $ 400,000. Last May, a median $ 340,000 home with a 3% interest rate was paid $ 1,146 per month. Today, median homes cost $ 630 more, or $ 1,776 a month.

Mortgage rates have risen in recent decades, but it’s a combination of rates with competitive markets that have proven difficult. Jennifer Salazar, senior loan officer at Fairway Independent Mortgage Corp. in Garland, said first-time homebuyers are under the most pressure and some have been completely reduced.

“We all have to have a tough conversation. I don’t think realtors and lenders know how to say you’re in a market where you may never be able to buy something. “Salazar said. “I don’t think anyone really knows how to say that in a good way so far.”

A Recent research According to a Bank of America survey, the majority of prospective buyers are prepared to rethink their distance from neighborhoods, entertainment, restaurants and shopping to get a home.

Greg Howe, Bank of America Vice President and Lending Market Leader at Dallas / Fort Worth, said:

Brian Pacorsky, Senior Managing Director of the Dallas Compass, said:

The Mortgage Bankers Association predicts that interest rates will “flatten near current levels.” Mike Fratantoni, Chief Economist of the organization, said: Said in a statement May 5th. This is welcome news for buyers in the highly competitive North Texas market.

Maryam Hamadu, the first homebuyer to work in the health insurance industry, needed to expand her search to Wylie and Princeton in order to stay below the $ 450,000 budget. She suspended her search from February to December last year and was frustrated that she couldn’t find a home she liked in the price range of Plano or its surroundings.

“I realized I couldn’t afford to find a place here myself,” Hamadu said.

Plano’s renter, Mariam Hamadu, suspended her home search for most of last year. She then resumed her search to avoid rising mortgage rates and home prices.(Unjashline)

When she started searching last January, mortgage rates were less than 3%. She decided to move again in the winter to stay ahead of further rises in both her rates and home prices.

She also focuses on new construction, even if it could be on the waiting list for up to a year to avoid the unpredictable situation of bidding on a house and paying much more than the asking price. I am.

“We decided we needed to get up again before things got worse,” Hamadu said.

Bank of America found that 40% of buyers said that too high interest rates were one of the reasons they hesitated to buy. Still, low housing supply and high prices in the market can be a major factor in the minds of many buyers. Howe said the charges did not significantly affect the overall demand for his office.

“We still have many clients who are interested in buying,” Howe said. “The biggest problem they currently have is getting the offer accepted because there isn’t enough supply in the market.”

Another first-time buyer, Kevin Turner, said he had offered about 20 homes since last year and encountered a situation where paying $ 30,000 to $ 50,000 for the asking price wasn’t enough. Told. Rising mortgage rates haven’t affected his buying ability or willingness to buy so far, but he said it could change in the next six months.

“But if anything, when interest rates go up, some of me are moving forward, well, that may slow down the competition a bit,” he said. “But I haven’t seen it.”

Turner said he regrets not entering the market in 2020, when interest rates were very low and prices were not very high. His girlfriend predicted that the market would explode next year.

“She isn’t a financial or real estate expert, but a man, she called it,” Turner said. “I should probably have listened to her.”

Note: This story was updated on Friday to correct the year-over-year difference in monthly mortgage payments.

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