By the Kent Redding Group
AUSTIN, TX. – Have you been planning on buying a home? If so, now is the best time for you to make your move as mortgage interest rates have continued their gradual rise, making it costlier for many people to buy a home.
As of March 1st 2018, the average mortgage interest rate for a 30-year fixed mortgage loan is 4.43% and this is the highest mortgage interest rates have been since January 2014.
Thanks to a strong economy and a positive economic outlook by many people in the Trump Administration it’s likely that we will continue to see rising mortgage interest rates in the years to come as everyone from the President on down to key economic advisors in his administration seem eager to embrace rate increases.
After hitting historic lows, average mortgage rates have now reached their highest levels in more than four years. They hit an average 4.43% for 30-year, fixed-rate loans as of March 1, according to Freddie Mac data. This was the highest they've been since Jan. 9, 2014, when they were an average 4.51%.
They're expected to go up even more after the Federal Reserve raises short-term interest rates. The new Fed chairman, Jerome H. Powell, says the Fed is likely to gradually increase them this year. It is expected to bump up rates at least three times this year, in 0.25% increments, beginning this month.
And while short-term rates and mortgage rates are separate, mortgage rates usually follow any increases from the Fed.
"For the bulk of buyers, it's not going to kill their decision to purchase a home. If anything, it will get them off the fence by creating a sense of urgency," says Rick Palacios Jr., director of research at John Burns Real Estate Consulting. Higher rates are "a kick in the pants for you to start thinking seriously [about buying]."
Even a fraction of a percentage point rise quickly adds up. On a $300,000 house with a 30-year fixed mortgage and 20% down payment, the difference between 4% and 5% is $142 a month. That's more than $51,000 during the life of the mortgage.
"Buyers thought they could wait forever because rates were going to stay low forever," says Palacios.
"They're starting to realize if they're going to buy they should probably buy now."
Do This Before Applying for A Mortgage Loan
Before applying for a mortgage loan to buy a home in Austin Texas or elsewhere in the United States it’s best to review your credit report to make sure that you don’t have any unpaid bills or debts which could be holding you back from having a credit score that’s 700+.
You should also strive to save at least 20% for a down payment so you can start your next life as a homeowner with plenty of “skin in the game”.
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To get started with searching for homes in the Austin Texas area, or to speak with us about selling your home, contact us today by calling (512) 306-1001 or click here to connect with us online.