Why did it have to stop? It was getting so easy to borrow money and invest in smart moves that made you more money. The markets kept going up but people were able to utilize borrowing money to keep up and buy their dream house, a new car or even invest a bit. This was the ideal situation for people who wanted to make major financial moves as a perfect situation of rising costs, low-interest rates and increased income created options for everyone with financial ambitions. Now, it’s gone and we cannot be sure when it will come back.

So, there will be no borrowing of money until rates go back down? No, that can’t be correct, otherwise, prices would drop immediately. People are still buying, either not being concerned with rising rates or having some hidden secrets that allow them to borrow money with low down payments and still have affordable monthly payments.

Why Is It So Expensive To Borrow Money?

In fairness, prices were starting to go up too fast for everything. The price of groceries was nearly doubled in some areas from five years prior and those hikes hit nearly everything on the shelf. The only way to slow down prices is to slow down demand which is why the interest rates had to go up. Overall, the economy needed to cool down and take a break from its hot market buying.

The easiest and quickest way to slow an economy down is to raise interest rates. However, while this is great for the economy and those who will benefit from it, that still doesn’t help you. In fact, these rate hikes could not have come at a worse time for you. There are properties, businesses and other things you want to buy either for yourself or for investment purposes. You are not as concerned with the increase in costs as you are in the increase in the cost of borrowing money right now. That’s where you can really lose a lot and not being able to borrow may be what causes you to miss out on a great opportunity.

What Loans Offer The Best Options?

While it is more expensive to borrow money right now, people are still doing it. It’s easy to say that these are just wealthy people who can pay in cash. The reality is that there are still affordable loans that you can get, with lower-than-expected interest rates and lower down payments as well.

• FHA: These types of loans are backed by the Federal Housing Administration. Why do lenders love these types of loans? Because they are insured which means if the buyer defaults on the loan, the lender still gets paid.
• VA: Those eligible to borrow money under a VA loan will appreciate a zero-dollar down mortgage option as well as the option to refinance an existing mortgage. This is a fantastic option that will greatly lower your initial investment in the property as well as allow you to keep monthly payments lower than expected.
• USDA: A lesser-known but just as important option is offered under the Rural Developers Rural Housing Direct Home Loan Program. These options require no money down and cover lower-income individuals as well as families.
• Personal: If you are seeking an individual loan to cover a non-property financial transaction, a personal loan may be the best option for you to consider. This will allow you to cover the costs of fixing a car, getting out of credit card debt, paying for school, making a smart investment or something else.

As you consider the challenges that you will have in finding financing, also consider the options that are available to you. Many of these options have benefits including little to no down payments, lower-than-expected interest rates, consideration beyond your credit score and the ability to work with or be backed by federal institutions.

The Key To Borrowing Money

Whenever you are researching options for borrowing money, you are going to see tips that speak about interest rates, improving your credit score and so forth. All of these are tips and important ones on how to lower the monthly cost without putting more money down. However, one of the things people often forget about, which actually is the most important factor when you borrow money, is your income. If you are going to take out a loan, the lender needs to know that you can pay it back. Because of this, if you are planning to apply in the near future, focus on getting your income up as much as possible because that will make as big a difference as anything.

When it comes to credit, your numbers do not have as great an impact as you may think. In many cases, lenders may not offer that much of a better discount for people who have a score above 750. However, that does not mean it is not worth the investment and time to improve your numbers, especially if you are concerned that your income is not high enough to grab the amount of money you need. Increasing your score by even 100 points could be the difference between qualifying or not based on your income and the cost to borrow.

Interest rates will be the biggest factor that plays a role in what you have to pay each month, aside from the total amount borrowed of course. In some cases, raising the rates by even a single point can cost a homeowner an additional $100 a month on a new loan. Yes, there are opportunities to refinance or get an adjustable rate. However, if the numbers do not go down for a year or two, can you afford that increase in cost each month?

This is why finding different options that are available is essential to having financial success. If you want to buy a home, you need to see if you qualify for loan options including with the VA, FHA, and USDA. Perhaps there are other options that you qualify for that you are unaware of? Put the work in to see what your options are so that you can either borrow more or keep your monthly costs down as much as possible.