Fall is a great time to purchase a new home! However, the current mortgage interest rates could make the difference between approval and denial of your mortgage application.
How Mortgage Interest Rates Affect My Mortgage
One of the first pieces of information people want to know when purchasing a new home is, “What is the mortgage rate?”
The Mortgage Rate is the rate of interest that will be paid back to the mortgage lender. It’s important to know that the amount of your monthly payment is significantly affected by the mortgage rate.
Consequently, a monthly payment on a house with a rate of 18.63% (the 45-year high in 1981) is significantly more than a house with a rate of 3.31% (the 45-year low in 2012). In fact, a higher interest rate is the reason a mortgage might be denied because the buyer cannot afford the higher monthly payment. However, during times when the mortgage rates are low, the lender may approve a mortgage on the same priced house.
Mortgage Interest Rates Now
You should be aware that mortgage interest rates are rising. In fact, the Fed raised interest rates in September for the third time this year. Furthermore, another rate increase in indicated this December.
Despite the supposed impending mortgage rate increase, current mortgage rates remain at historical lows around 4%. In fact, over 63% of homeowners with mortgages pay interest rates between 3% and 4.9%, according to the Census Bureau.
These low rates keep the interest portion of your monthly mortgage payment relatively low.
Looking Ahead to 2019
As stated earlier, mortgage rates are steadily increasing this year. Experts predict that by the beginning of 2019, rates will climb even higher.
The Mortgage Bankers Association (MBA) updated its long-range forecast, predicting that the average 30-year mortgage rates would rise to 4.9% by the fourth quarter of this year (2018), and reach 5% by the end of 2019.
Therefore, many experts claim right now is the perfect time to buy a home! I couldn’t agree more, given these facts.
If you agree, contact me to help you find the perfect home – and also keep your monthly payments as low as possible, too, before mortgage interest rates begin climbing again.
Dana Davis Properties/DHR (Distinguished Homes Realty)
Phone: (386) 569-4998