Mortgage Rates on the Rise
Mortgage rates have been on the rise lately. The most common loan product, a 30-year fixed rate, is closer to 5 percent. It hasn’t been this high since 2011 according to recorded data. Experts predict rates will continue to rise. To practically navigate rising rates, here are a few items to consider.
Will I miss my chance to get a low rate?
Not really, it depends on your situation. Although rates are the highest they’ve been in a while, they are still pretty historically low. If you already own a home and you’ve been there for more than seven years, you could still be paying more in interest costs. Rates, as described in the media, are usually in relation to 30-year fixed rate mortgages. If your situation can accommodate for different loan product options, your mortgage professional should be able to place you in a program best for your situation.
What’s causing the rate hike anyway?
Although we aren’t professional economists here at Mortgage Biz, we do watch and study the market closely. The rates hike right now is due to statistics indicating low unemployment rates in the US, indicating a strong economy. A strong economy typically results in higher rates. A good way to understand if rates will decrease, there could be a small amount of bad economic news on the horizon. Generally, a strong economy brings in higher rates.
If I own a home and want to refinance, is it still a smart move?
This also depends, you may have not missed the opportunity to refinance as a smart financial move. As mentioned above, if you’ve been in your home for a while, you could check with us to see if we can beat your previous mortgage interest rate.
How can I get the best interest rate for my home loan?
Although rates are important, it is also advantageous to consider monthly payments. Who doesn’t want to figure out if they can get the lowest cost for the time in which they intend to live in a house? For example, a lot of first time home buyers opt for a 30 year fixed mortgage but end up living there for 5 to 7 years. Match your mortgage product type for the period in which you will need the loan.
What about my credit score, will that affect my rate?
The better your score, the better the chance for a lower rate. Don’t allow the myth of a perfect credit score accompanied by a large down payment deter you from speaking to a mortgage professional, like Mortgage Biz of Florida, to see if you pre-qualify. There are many programs out there that require very little to no money down depending on what’s best for you.
If the rates are higher, will home prices lower?
This situation is two-fold. There may be people who have been waiting to get in on purchasing a home and may feel the pressure to buy before rate rise further. This behavior squeezes out the supply (houses) and increases the demand in the short term. Speaking from a long-term perspective, not really. Rates are only one factor in the buying process. Don’t allow that to deter your decision. Our advice is to work with qualified professionals who have your best interest and will advocate for you during the home buying process. We’d be happy to help, give us a call at 561-420-0001!