Many of us can barely keep up with the pace of our lives, let alone stay current on the real estate interest rates.
Do interest rates matter to you and your home buying experience? Yes. Rising mortgage rates will have an impact on the direction you choose when shopping for real estate. “Every time the interest rates go up, you eliminate a group of people who can no longer afford to buy a house,” Don Frommeyer, a mortgage broker at Marine Bank in Indianapolis, told realtor.com®. “Some people may have to rent for a period of time until they make more money—or buy a smaller house.”
Interest rates are expected to move higher during the year. When the interest rate increases, it decreases the amount borrower’s can afford. First-time buyers could be affected the most by rising rates. This together with the rising home prices will price some buyers out of purchasing a home.
Though still amazingly low, mortgage interest rates are at their highest level in more than four years. A 30-year fixed-rate mortgage is currently averaging 4.46 percent. The Federal Reserve said it is likely to raise its short-term interest rates this year, so the joy of very low interest rates appears to be ending. Here’s an article from Bankrate to help explain.
I would say this will not keep people from buying homes in Cheyenne this year, but it will make them pay off debt first, settle for a smaller home or skip the upgrades. It should give a sense of urgency to the buyer who isn’t sure yet about moving.
Realtor.com® offers this example: On a $300,000 house with a 30-year fixed-rate mortgage and 20 percent down payment, the difference between a 4 percent and 5 percent mortgage rate is $142 a month. Calculated over the life of the loan, that is more than an extra $51,000.
One thing home buyers may consider is locking in the interest rate with a lender. Generally this will cost a certain percentage amount of the loan, so you’ll need some cash. First time home buyers will want to get started sooner rather than later for planning, saving and home shopping. I recommend connecting with a real estate professional to learn your options and get a recommendation for a lender. Over the years realtors learn which lenders have what plans and services available and they can direct you to the perfect mortgage lender for you.