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Interest Rates and What They Mean for Your Home Purchase

Posted by Tori Thompson on December 20, 2022
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Interest rates play an important role when it comes to buying a home. It’s important to understand the basics of how interest rates work and perform your own research to ensure that you are getting the best deal possible when it comes time to making a home purchase.

Have you been on the fence for some time about making a home purchase because you’re concerned about the rates? The number one question is, Tori, What are home interest rates doing? By the end of this blog, you will have refreshed your perspective, overcome mortgage rate fears, so no matter the interest rate, you can push through, get into your new home, and make the right decision when it comes to interest rates and your home purchase.

Your monthly house payment depends on many factors. Today we are discussing the interest rate because it has been holding many people back from their goals of homeownership or investing. Here’s what we really must consider:

Rates Are Always Constantly Changing

The lending rates on a loan today will likely be different from yesterday’s or tomorrow’s rate. Over the last few years we have seen huge rate changes. Recent and historical interest rates changes, on a 30-year mortgage was its highest at 18% in 1981 and fell below 3% in 2020. Hypothetically speaking, what if you wait another 40 years for rates to go down low? Or what if you continue to wait and the rate increases? Unfortunately no one can predict the direction of interest rates. In my opinion, I feel that interest rates are not really high if we were to factor out the last 2.5 years rates as they were actual anomalies.

Consider Fixed vs Variable Rates When Buying a Home

First, there are fixed Rates which stay locked and remain the same for the entire duration of the loan – most commonly we see 30-year and 15-year fixed-rate mortgages. There are also adjustable rate mortgages that start out low but change after a certain period. Adjustable rates are a good route to take if they are lower than fixed rates. Also if you’re not looking to live in the home for a long-term or willing to refinance in a few years if you plan on staying.

Thankfully, there are comparison tools like MortgageCalculator.org that help you compare the different mortgage options available so you can make an informed decision. With this tool, you’ll be able to determine what type of loan – fixed or adjustable rate – is best for your financial situation.

Prepare to Make a Home Purchase

Once you have compared the rates and made your decision to purchase. Choose your new or existing home and close before 45 days. This will eliminate so much stress and any possibility of your rate increasing. Interest rates are just one aspect of a mortgage to consider when purchasing a home. We have to get back to a place where we focus not so much on the interest rate but, on whether we can comfortably afford the monthly payment.

Your New Home Awaits...

Making the right decision when it comes to interest rates and your home purchase can be a daunting task. Yet, what is the cost of waiting? And lastly, If you’re not looking at a double digit rate, then that is a win!

I am happy to give you a list of questions that you can use as a guide when you talk with your lender. My contact information is below. Check out my video if you’re interested in learning the “ Top 3 Home buying tips will help you choose the right house.

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