If you are eager to own a home, but want to ensure your rational mind also comes to the table when making a decision, approach lenders and go through a mortgage pre-approval process.
Chicago, IL (PRWEB) June 06, 2013
As mortgage rates continue to rise after what has been one of the most volatile months in mortgage rate history, many first-time home buyers are left with as many questions as spells of vertigo. The Federal Savings Bank has been clearing the number of questions coming from its perspective clients because it's hard to know what to do, especially with rates projected to inch higher in the future.
As reported in Bankrate's latest survey, mortgage rates climbed for the fourth week in a row, jumping from 3.4 percent to 3.9 percent. According to Daily Finance - for a standard 30-year mortgage of $200,000 - that rate rise would account for a monthly mortgage payment increase of $56 - not terrible.
While mortgage rates are definitely a deciding factor for many would-be buyers, it is important not to react to any rise in mortgage rates, especially now. Even after the historical increase, mortgage rates are still historically very low - a fact that is partly the result of the quantitative easing "bond buying" policy implemented by the Federal Reserve. It is because of this that Erin Lantz, director of mortgages at Zillow, claims rates are not going to drastically climb in the near future.
"Even if the Federal Reserve starts to scale back its stimulus program, the Fed will still help keep rates low for the remainder of the year in order to accelerate the housing market recovery," Lantz said. "As the Fed withdraws support and the economy recovers, we expect rates will rise gradually over the next 18 months."
Until that happens, it is important to be reasonably patient and, in the mean time, put all of your ducks in a row.
Why be patient?
According to data from the Mortgage Bankers Association as reported by Daily Finance, applications for mortgage refinancing took a 15 percent hit - a figure that, as mortgage rates rise, we can expect to drop. Surprisingly however, mortgage applications for new home purchases rose by 3 percent. As first-time home buyers clamor to lock in a low mortgage rate, many end up paying the same, or more, and for a home they really didn't want because they rushed into a deal that favored the sellers. If anything is certain in real estate, buyer impatience favors the seller.
If you are eager to own a home, but want to ensure your rational mind also comes to the table when making a decision, approach lenders and go through a mortgage pre-approval process. Then, you'll know what you are able to spend without breaking the bank.