We know how it goes - looking at houses online in your favorite neighborhoods and wondering if this is the right time to buy. Many buyers wonder if they should purchase a home now or wait a few months to see if that makes better financial sense. But interest rates have been on the rise so now might be the time to buy a home.
Why Interest Rates Are Rising
Our economy is doing well, unemployment is down, and tax cuts have helped many companies and individuals. However, these factors all contribute to a secondary effect - increased interest rates. This year, The Fed has raised interest rates and that means mortgage rates have increased as well. Mortgage interest rates are about three-quarters of a percent higher than they were a year ago. These rates are expected to rise more before the end of the year.
The rise in interest rates is happening gradually but mortgage rates are historically low for now, meaning that it can still be a good time to buy a home. But if the rates continue increasing, what does it mean for your home purchasing plans?
How Do Rising Interest Rates Affect Home Buying?
With mortgage interest rates predicted to continue rising this year (source: NPR), it will have an impact on your home buying decision. When you get a home loan with a higher rate, it means you will have higher monthly payments. While these jumps in payment amounts are not outrageous, every rate increase can make it a little tougher to afford your monthly payment as well as your ability to qualify for a loan with a lender. Our loan advisors are here to help you determine what size mortgage you qualify for and what price home you can buy based on your current income and expenses.
Should You Buy a Home Now?
The increases are predicted to happen gradually. But since rates are predicted to keep rising, even into next year, you can save yourself a little money on expenses and improve your purchasing power if you buy sooner rather than later. You can also decide to lock in your interest rate earlier in the loan process to avoid rate increases.
Please note that although most industry analysts expect interest rates to rise in 2018, a number of economic events could produce different results.
Despite whatever happens to interest rates, you should also know that APM has many programs that allow no or low money down and can save you money in other ways. Talk to one of our helpful loan advisors now to go over all of the home loan options and how your payments might differ later in the year if rates go up. Then get ready to start your homeownership journey!