4/21/22 - The housing market is experiencing another shift – rising interest rates. As home buyers prepare to enter the market, some are nervous about interest rates rising too quickly, preventing them from purchasing their dream home. Here are some things home buyers can expect in this environment.
What Homebuyers Should Know About Rising Rates
With inflation rising and the U.S. economy running hot, the average 30-year rate has now exceeded 5%, which is the highest it’s been since 2011. The good news is that even though interest rates are rising, purchasing a home can still be affordable. Borrowers can review options with their lender to find the right combination of product, down payment, and loan structure so that they can purchase their dream home without hurting their bank account.
How can homebuyers protect themselves financially?
Here are some things buyers can do to prepare for the increase in interest and protect their finances.
- Keep your prequalification letter up to date with your lender, making sure it reflects current rates.
- Instead of focusing solely on the interest rate, break down the entire payment, including taxes and insurance. Many times, people don’t notice that taxes in certain counties or cities could dramatically increase or decrease their monthly payment.
- Your credit score does effect rate. If you are wanting to get the best interest rate, make sure you have an optimal credit score.
- How much you put towards your down payment matters. Depending on the amount of down payment you can afford, your monthly cost could include mortgage insurance. However, an increase in down payment means that you may not need to pay mortgage insurance, which is something your lender can help you determine.
Blackhawk Bank Can Help with All Your Mortgage Needs
We want you to feel confident about the home buying journey, which is why we are committed to helping you every step of the way. Whether buying a home is in the near or distant future, our Mortgage Planners will guide you through the process. Ready to learn more about buying a home? Contact us today! Member FDIC | Equal Housing Lender
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