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Rising Mortgage Rates Means Hassle For Homebuyers
If you are considering buying a new home or refinancing your mortgage, act now before mortgage rates increase even more!
Throughout the COVID-19 pandemic and much of this year, mortgage rates dropped to historic all-time lows. While it’s hard to find anything positive about a global pandemic, the unbeatable savings homeowners and buyers were able to get while mortgage rates were so low was certainly a bright spot. Lower mortgage rates meant lower monthly payments so funds could be used for other purposes, lessened amounts of interest owed, and an increased ability to purchase larger homes or more expensive homes in desirable areas. However, we all knew that these insanely low mortgage rates couldn’t last, and as predicted, the rates for the most popular home loans have begun to rise again.
For the first time in a long time, experts have reported that mortgage rates increased to over 3% for the country’s most popular types of home loans. Data released by Freddie Mac shows that 30-year-fixed-rate-mortgage interest rates jumped from 2.88% to 3.01% in the final week of September. Meanwhile, the interest rates for 15-year-fixed-mortgages rose from 2.15% to 2.28% during the same time period. While 3% is still an attractive mortgage rate, experts expect rates to continue to increase over the coming months. Therefore, if you’re looking to buy a new home or refinance your current mortgage, it’s important to act now so you can take advantage of these rates before they rise again.
If you haven’t heard of refinancing before, it’s essentially a process that allows you to trade in your old mortgage for a new one. Your bank or lender will pay off your old mortgage with the new one, which is where the term refinancing comes from. When rates drop significantly like they did over the past year, homeowners can save money by refinancing their mortgage with a lower interest rate than their previous mortgage. Therefore, you should be happy if you already refinanced while rates were at their lowest or let this article be your sign to refinance now before rates surge again.
For potential homebuyers, and especially those hunting for their first house, mortgage rates can determine what you can or can’t afford. While mortgage rates don’t necessarily impact housing prices, a higher mortgage equates to larger monthly payments and more interest. If buying a house is already a bit of a financial stretch for you, taking advantage of lower rates will help your budget stretch a bit farther or could provide some peace of mind.
Although raising mortgage rates could hurt some homebuyers, the real estate market is not expected to slow anytime soon. While some potential buyers were hoping surging rates would make the housing market less competitive, experts expect that the increasing home prices along with steadily rising mortgage rates that are expected throughout the year won’t halt the rush. This could push low-income buyers and first-time homebuyers out of the market, at least for the time being. As such, potential buyers could turn back into renters, making this a good time to buy income properties to lease out as an investment if you have the means to do so.
All in all, we can now definitively say we’ve seen the first surge in rising mortgage rates since the COVID-19 pandemic. While there is no way to guarantee the future, rising rates mean it’s important to hustle to buy a new home or refinance your mortgage now to take advantage of these low rates while they are still good if that’s something you need to do. If not, you may find yourself waiting for quite a while until the housing market moves in your favor again and it’s financially smart to buy or refinance your home. In other words, act now or forever hold your peace.
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