It’s no secret that mortgage rates are currently a lot higher than they were this time last year. A series of Federal Reserve rate hikes meant to temper inflation have caused rates to skyrocket in recent months — and mortgage ratesearlier this month.
While that’s not particularly ideal for homebuyers who are trying to finance a home purchase, there is some good news right now:just hit a three-week low, with the average 30-year mortgage loan rate dropping to 7.54% — down 8 basis points from the week prior. The 15-year mortgage rate also declined, hitting an average of 8.82%, a drop of 1 basis point from the week prior.
But they may not stay that way for long. There are clear signs that mortgage rates are likely to increase again in the coming weeks or months, so if you’re thinking about buying a home in the near future, you need to make this one move now.
Explore the mortgage rates you may qualify for here now.
Mortgage rates are at a 3-week low. Here’s what buyers should do now.
If you’re considering a home purchase soon, the one move you should make right now is to. By locking in your mortgage rate, you secure an agreed-upon interest rate with your lender for a specified period, typically ranging from 30 to 60 days.
This means that regardless of how market rates may change during this period, your lender guarantees that you will be offered the locked-in rate when you close on your mortgage. In essence, you’re shielding yourself from the volatility of mortgage interest rate shifts that could otherwise impact your monthly mortgage payments.
And considering the current rate and housing market environment, this is likely a smart move for most buyers.
Learn more about your mortgage loan options here now.
Why you should lock in a mortgage rate now
There are a few different reasons you may want to lock in a rate right now, including:
The Fed is likely to increase rates again soon
While mortgage rates are higher now than they were last year or the year prior, there’s a good chance that they’ll increase yet again. Federal Reserve Chairman Jerome Powell indicated in a speech last week that another rate hike may be on the horizon to continue to try and tamp down inflation. And, considering that the inflation rate in July, it’s looking more and more likely that there will be more Fed rate increase on the horizon.
If that happens, the rate hike will almost certainly lead to mortgage rates increasing in tandem. This, in turn, will make it even more expensive to buy a home.
Even a slight increase could result in much higher loan costs on a monthly basis — and over the life of the loan — so it’s important to lock in your rate when they’re lower than normal. But, if you wait, the rate you could have locked in now could seem a lot more appealing.
Home inventory is still low
It may also make sense to lock in a mortgage rate right now becausein most markets. If you’re trying to purchase a home in one of these parts of the country, there are still lots of buyers waiting to jump on the available home inventory — and lots of competition.
In other words, waiting could mean missing out on your dream home, which could only come around once. You don’t want to watch the opportunity to snagslip by, so it could be worth buying even though rates are elevated.
Refinancing is an option if rates drop
The mortgage rate you secure today doesn’t have to be your forever rate. If mortgage rates drop in the future, you have the option toto one with a lower interest rate, saving you money.
But what you won’t have the option to do if rates drop is to buy that home you passed up on while waiting for a lower mortgage rate environment. And, if you wait, you may have even more trouble landing a contract on a home, as lower rates typically mean more buyers entering the market. And that means even more competition for the available homes, too.
There’s a reason why experts suggest you “date the rate but marry the home.” You aren’t tied to your rate forever, but you may not find another dream home if you wait. And, with the unique housing market we’re facing, it could make a lot more sense to take this rate-date approach.
Rates aren’t exceptionally high on a historical basis
It’s also worth noting that today’s mortgage and mortgage refinance interest rates aren’t exceptionally high when compared to historical rates. While these rates aren’t the 2% and 3% rates that homebuyers were getting during the pandemic, they’re still relatively average when compared to historical mortgage rates.
The bottom line
While mortgage rates are high compared to last year, this temporary drop offers some reprieve for buyers. And if you’re trying to buy a home right now, it may be worth locking in a rate today while mortgage rates are at a three-week low. After all, there are numerous signs that point to rates increasing in the near future, and if you wait to see what happens, you could end up paying a lot more in interest on your home — while facing other issues due to low inventory and high home prices, too. But if you lock in a rate now, you’ll be prepared to jump on your dream home when it comes on the market — and you can always refinance down the road if rates drop significantly.
Denial of responsibility! Planetconcerns is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.