The first thing to remember about interest rates and home buying, is…nothing is ever going to be perfect. Waiting for all things considered to be perfect, is a recipe for avoiding an actual homeowner. You can wait for conditions to optimal and have the right guidance, but perfection is rare. So, you may be wondering, I have the right team, my credit worthiness is the best ever, so when should I buy? When it comes to interest rates, some say, the time is now!
Interest rates in the U.S. have been close to zero for the last seven years, intentionally kept low to allow employment and the market to recover from the crash in 2008. For new homebuyers, the expectation of a rate hike spurred many to buy in the months leading up to the decision and encouraged a cycle of refinancing from existing homeowners. But the moderate rate increase does not spell doom if you're looking to buy a home – in fact, it may give you the push you need to get out there and buy your home before interest rates rise again.
How will rising interest rates affect you as a homebuyer? U.S. News asked experts to weigh in on whether you should be concerned about your ability to afford a mortgage and what you should know about interest rates in the next year.
Rising interest rates don’t mean you can’t find a mortgage that works for you. The rate hike is minor and isn’t likely to squeeze too many consumers out of being able to buy a home. You might have to reconfigure what you put down versus what you pay monthly, but mortgage rates differ from day to day and lender to lender. It’s human nature to ask our circle their opinion, when it comes to things like this. Two heads are better than one, right? So, maybe it needs to be said again, “MORTGAGE RATES DIFFER FROM DAY TO DAY AND LENDER TO LENDER.” One expert offers a helpful analogy, “It’s like buying gasoline – it’s different by provider, it’s different one street to the next.”
Many economists are expecting interest rates to continue to increase throughout the next year, and while it may be a small increments in steady increases, getting a mortgage on the lower end is always a better idea than waiting and paying more. Increased rates can help keep house appreciation in line with wage increases. As housing markets continue to recover from the recession, home values have been appreciating rapidly, outpacing wage increases and making it more difficult for everyone to afford them.
You should still shop around. Treat your mortgage like any other major purchase – weigh your options and compare rates before you sign onto one. The mortgage, and your ability to pay it off, are just as important as the house you choose to buy. Make good choices! The first of which, is hiring a real estate expert to answer all of your questions, specific to your personal buying power, needs, and financial situation. As always, Carod Properties here to help!
By: Alicia M. Caldwell, AMC Literary Services
