As interest rates increase, it affects home buyers’ monthly payments, as well as the amount of income needed to qualify to buy a home.
“The average rate for a 30-year fixed-rate mortgage rose to 4.16%, up from 4.13% last week, according to Freddie Mac. A year ago, rates were sitting around 3.97%.
“At the current interest rates, buyers will pay $21 more per month compared to a year ago, assuming a $241,000 price tag and 20% down payment.”
Read more of this article at Money.CNN.com.
How to shop: If you simply call up and ask a lender for interest rates the lender can tell you almost anything. One lender might offer a floating rate, while the next would offer you a forty day rate. Instead, before you call up you need to know two things: how many points you want to pay and how long you want to lock in the rate. You also want to call all the lenders on the same day. This way you will get a common basis of comparison for the different quotes.
Getting a reliable quote: Beware of lenders who promise unreasonable low rates. This does not mean that lenders are unreliable; however there is an incentive for the lender to fudge the quote in order to gain your business (the bait). Then when you go in to fill out the paper work the lender will change the rate on you (the switch).
How to Really Shop for a Lender: The best way is to get a referral, then shop other lenders. Do it properly, telling the lenders how much you are willing to pay in points and how long you want to lock in the rate. Make all your calls on the same day. Tell the lender you have filled out an application and that you will fax it in, so the rate has to be something he can deliver.
“In December, when the Federal Reserve raised rates for the first time in nearly a decade, many would-be homebuyers assumed it meant the beginning of the end for record-low mortgage rates.
“‘This is evidence that the Federal Reserve isn’t the sole determinant of U.S. mortgage rates,’ said Mark Hamrick, senior economic analyst at Bankrate.
“The 30-year mortgage rate fell to 3.79%, the fourth straight week of declines, according to Freddie Mac. A year ago, the rate averaged 3.66%.
“The rate on a 15-year fixed mortgage also dropped to 3.07%…
“…But tight inventory has helped push home prices higher, creating an affordability problem in many markets throughout the country.
“In response to the lower rates, mortgage applications ticked up 8.8% last week.”
Read the rest of CNN’s article here: money.cnn.com/2016/01/28/real_estate/mortgage-rates-fall
If you’re planning on capitalizing on these still-low interest rates by becoming a homeowner this year, consider these tips:
Read the full article and all of its advice on the Yahoo! finance site: finance.yahoo.com/news/top-10-tips-mortgage-borrowers-100000055
Both rising interest rates and higher-priced homes the first part of 2015 are lessening home affordability for would-be homebuyers.
“Historically low interest rates and limited inventory in 2013 fueled some of the greatest housing appreciation in San Diego County since the early 2000s…
“San Diegans bought 42,702 homes last year, a slight uptick from 2012 but the most since 2006, the last full year before the Great Recession.
“Last year was a great year for investors, who in June enjoyed 24.1 percent annual appreciation — a post-Great Recession record — to a median price of $420,000…”
Read the rest of Union-Tribune San Diego’s article on 2013’s real estate market in review here.
Although home prices are likely to continue to rise in the next few years, the national market is not in danger of a bubble, according to prominent economists.
“Four of the next five years are likely to be improving years in the housing market. I don’t say five because there’s always the possibility of little hiccups in the housing market,” said Lawrence Yun, chief economist for the NATIONAL ASSOCIATION OF REALTORS®.