Interest rates are on everyone’s mind these days, and for good reason.

In an effort to combat inflation, the Fed has raised rates a total of six times this year. With mortgage rates hovering around 20-year highs and the housing market softening, what’s the smartest way to think about buying or selling a home?

Don’t let fear drive your actions! Here are six suggestions for making logical, thoughtful financial decisions.

1. Get to know your assets

Now is the time to fully understand your financial situation, long before you make an offer on a property. Once you know that, learn how your expenses will change after buying a home, given potentially higher property taxes, limitations on the mortgage interest deduction, maintenance and home improvements.

2. Get to know the house you are buying (or looking at).

Take the time to fully understand the home itself.

If you’ve accepted an offer, give yourself plenty of time for inspections and make sure all necessary repairs are done.

As you prepare to submit an offer, talk to your potential future neighbors two or three doors down about the area’s traffic, barking dogs, etc.

Don’t assume anything about the location of your property lines, whether permits have been pulled for a remodel, whether or not a house down the street is a rental, or if there’s a registered sex offender next door. Verify before you buy.

3. Get comfortable with the worst case scenario

When selling your home, do a thought exercise about what would happen in a worst-case scenario: What would you do if your home sat unsold for a few months? What if it sells for less than you expect? You need to have a plan how to deal with these situations – hope for the best, prepare for the worst.

4. Buy for the right reasons

So many of us believe that real estate is always a good investment, but that’s just not the case.

There are many situations when real estate is a terrible investment, so don’t rush in blindly. Very generally, for real estate to be a good investment, you need to hold the property for at least a few years, probably at least five years.

But think long term. Buying a home is for most people the biggest financial decision they will make, so take the time to get it right and minimize the chance of buyer’s remorse.

5. Be patient but be ready

Property prices are still at relatively high levels and it may take some time to fall further and bottom out. That said, highly desirable homes still sell quickly. A great property in a great location can still get multiple offers, so it’s extremely important to know what you want and make a move to get it when you do.

On the other hand, if you find a home that doesn’t check every one of your boxes, take your time with it to really make sure it’s a decision you can live with for a few years.

6. Adjust your expectations

The higher interest rates we’re seeing now are closer to more historical norms, so I wouldn’t expect 30-year mortgages to drop below 3% again.

If you can afford your new dream home, don’t let current rates deter you from buying now; you can always refinance later if rates drop.

And if rates keep going up, at least you’ll know you got the best rate you could. If you currently own a home with a mortgage, it’s probably in the 3% range. Such a low rate is hard to give up if you sell your home, which gives all the more reason to carefully consider the motivations and financial consequences of a move.

For buyers: If you’re not quite ready to buy, the most important thing to do is talk to your financial planner and a mortgage lender.

Give them an idea of ​​your financial situation and what kind of home you want, and they’ll help you get pre-approved and educate you on what kind of loan you can get. Educate yourself about how the underwriting process works. Take time to explore neighborhoods and get specific about what you want. Go to open houses, put out feelers, talk to lots of people and find an experienced and engaged real estate agent you trust.

For sellers: If you’re not quite ready to sell, carefully select some home improvements, remove clutter, and do a deep clean inside and out.

Paint the walls if it’s been a while, maybe remove the carpets and redo the floors – but don’t go too crazy! Little things make a big difference, like replacing old doorknobs and lights. A complete kitchen or bathroom renovation probably won’t pay for itself when you list the home.

Despite what you hear on the news, this is not necessarily the worst time to buy or sell. Every situation is unique, and with a little education and reflection, you can make smart decisions even during turbulent times.

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