Should You Be Worried About the Recent Interest Rate Hike?

Interest rates are on the rise again, but is it really a cause for concern?

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Interest rates are on the rise again and it could have an impact on you if you're thinking of buying and/or selling a home.

Right on schedule, the Federal Reserve raised interest rates mid-June by 0.25% and they're expected to raise them again at least one more time before the end of the year. This means interest rates for homebuyers will go up, but things like car loans and home equity lines of credit will go up as well. Credit card rates will rise, also.

The good news is that the Fed is acting on schedule.

Homebuyers seeking financing will also qualify for a little bit less in terms of purchase price. It won't be a huge impact—depending on your mortgage amount, the monthly cost will increase by about $50. The good takeaway is that the Fed acted on schedule with this increase; when unexpected things start happening with interest rates is when things can get sticky.

As jobs and the market improves, the Fed will raise rates to combat inflation, so it's a good sign for the economy. If you have any questions about interest rates and how they affect you when buying or selling real estate here in the Chicago area, give us a call or send us an email soon. We'd be glad to help.

How to Buy Your Next Home With a Contingency

There are two types of home sale contingencies that can have a big impact on your home sale and your ability to buy your next home.

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There are two types of home sale contingencies when a seller needs to sell their current home before they can buy the next one.

First, there's the contingency on sale day. In this case, the buyer has either listed or not listed their home yet, but regardless, it's not under contract, so they haven't closed. Under these circumstances, the seller may be apt to accept the offer, but unfortunately for the buyer, the seller can still market the home. If another buyer comes to the table with a better offer, the first buyer will typically have a day or two to either drop their contingency or back out of the deal and get their earnest money back.

The contingency on close is common with move-up buyers.

Then, there's the contingency on close. In this case, the seller will have their home listed and have a contract in place; all they have to do is go to the closing table. It's a much stronger contract. Under those terms, the buyer can still do their due diligence while waiting for their home to close. If the sale doesn't work out, then the contract is terminated. If the deal closes, then the buyer can close on the next home.

Homebuyers need to be aware of a few things with these contingencies as well. First, you need to find out if you can qualify for both homes at once if you want to buy the new one before closing the sale of your current home. This is a common scenario for buyers who are trading up into a newer, nicer, or larger home.

If you have any questions about home sale contingencies or about buying and selling a home in the Chicago market, give us a call or send us an email. We're here to help.