Don’t let rising interest rates stop you from buying your dream home
Are you ready to buy your dream home but afraid that rising interest rates will derail your plans? Never fear. Here are some easy and proven strategies for making your dreams a reality.
It’s true. Mortgage rates ARE rising. According to lender Freddie Mac’s primary mortgage market survey, on November 29, 2018, the average rate for a 30-year, fixed-rate mortgage was 4.81 percent. The comparable rate was 3.9 percent during the same week in 2017. Though rates may have dropped a bit since that time, any fresh movement may not last. At the end of 2018, the Mortgage Banker’s Association predicted rates for fixed mortgages will stay north of 5 percent through most of 2019. Freddie Mac also believes this trend will continue. Their survey predicts that rates will land in the area of 5.1 percent by the end of 2019 and 5.6 percent by 2020.
This is likely happening because the Fed hiked interest rates 4 times during 2018. Experts think this is resulting in higher mortgage interest rates that will affect borrowers with home equity lines of credit and adjustable rate mortgages at the very least.
How to afford a home with rising interest rates
There are things you can do to counter the influence of higher rates on the cost of your home. For starters, make sure your credit score is as strong as it can be so that you qualify for the lowest rate possible. Also, if you think you’re going to be able to make a home purchase in the next month or so and you see a rate that you like, lock it in.
Other tips to keep your mortgage rates low require you to have a bit more money up front. If you can find a way to bring more downpayment into the transaction, you’ll need to borrow less and this will cost you less. Alternatively, you can pay additional points at closing. One mortgage point is equal to one percent of your loan amount.
Overall, financing your home purchase can be complicated, especially when interest rates are rising. If you have questions, contact a trusted funder or mortgage professional to guide you through the process.