Rising Interest Rates

Interest rates are on the rise for the first time in a decade and are already beginning to be felt in the greater Sacramento area. As of last June, the average single family home price in Sacramento County was $550,000 (per Redfin as of June 29, 2022). Last year’s rates reached all time lows of around 2.86% (per Freddie-Mac’s historical data) which translated to roughly $2,615 a month based on the current median home price. Per Freddie-Mac’s data (as of June 23rd) interest rates have now climbed to 5.81% on average, resulting in the same house now costing $3,377 a month. This translates into approximately a 23% drop in purchasing power or $120,750 when based on the median Sacramento County home price.

Interest rate hikes can lead to a multitude of issues when it comes to homeowners selling their home. The pool of buyers shrinks, fewer people are willing to waive their inspection contingencies, and home issues are no longer overlooked.

Adjustable Rate Mortgages (ARM) can be a good solution for homeowners to maximize savings. However, they can also lead to a tenuous position where an already unaffordable situation is compounded by a rise in your mortgage payment. Rising payments in retirement can be hard to adapt to, which often means the need to re-evaluate your retirement plans. Economic stabilization can often be achieved by simply cutting expenses and finding a place that you can afford as soon as possible.

The rate hikes also mean that it gets more expensive for a homeowner to utilize their equity for unexpected expenses such as critical home repairs or a personal crisis. Not being able to utilize equity can be a large risk in retirement in the uncertain economic times we now live in. Being able to quickly adapt to the unexpected is key. The unexpected is where we can help. If your Sacramento area home is not loanable, your timeline is less than a standard 30-day escrow, or you just need cash fast we can help stabilize your unique financial situation.