Rising Mortgage Rates - What That Means For You
Buying a home will most likely be the biggest expense you ever have. Therefore, having an increase in mortgage rates can deter any new homebuyer from making such a large purchase.
But what do these rates actually mean? To give you a better understanding, your local Fayetteville mortgage lender, Jeff Wilmoth with Homestar Financial has listed key information on what rising mortgage rates mean for you.
Why Rates Change
Interest rates can increase for a number of different reasons. If the economy is doing well and wages are increasing then this could cause inflation, which means housing prices could rise in order to keep these prices stable.
Although making homes and mortgages more expensive is better for the economy as a whole, it makes it more difficult for homebuyers to get approved for a Fayetteville mortgage.
What Rising Rates Mean For You
As mentioned above, if interest rates are becoming more expensive then that means it is more difficult for homebuyers to get approved for a specific mortgage. If you were thinking about purchasing a $200,000 home and then the interest rises, you may need to think about obtaining a cheaper mortgage or look for a less expensive home.
For example, if you were looking to purchase a home for $200,000 and pay a 20% down payment of $40,000, then you could apply for a $160,000, 30-year loan with a fixed rate. If the average interest rates for a fixed mortgage are around 4.5% and jump up to 5.5%, you would then owe tens of thousands of dollars more in interest with this hike.
This means that if you are a first-time homebuyer and are looking for a Fayetteville mortgage, you may want to have more money saved up before you begin the application process so you are not stretching your finances to the highest possible limit.
For more information on how a rise in interest rate can affect all homebuyers, or to get started on your mortgage application, please contact your local Fayetteville mortgage lender, Jeff Wilmot with Homestar Financial at 404-597-5662.