Will rising mortgage rates finally cool the white-hot real estate market? Maybe, but that doesn’t mean affordability will improve.
In its April forecast, Fannie Mae predicted that demand for home purchases will slow over the next two years as potential buyers choose to keep the mortgages they secured at much lower rates and first-time homebuyer prices are squeezed out of the market.
“There is no doubt that homebuyers are in a difficult position right now, especially those who have had their affordability impacted by the rate change over the past few weeks,” said Robert Heck, vice president of mortgage loans at Morty.
If you’re considering buying a home soon, Heck advises exploring several mortgage options, including different loan types and terms, to determine what’s best for you. And if you’re struggling with yet another lack of affordability in this rising rate environment, be prepared to adjust your budget.
“If rising rates have reduced your affordability, take a look at what you can afford now,” Heck says. “We’ve seen a number of buyers successfully compromise over the past month, which can be frustrating in the moment, but helps you achieve your longer-term homeownership goals.”
Current Mortgage Rates
Current refinance rates
Use our free mortgage calculator to see the impact of today’s mortgage rates on your monthly payments. By plugging in different rates and terms, you’ll also understand how much you’ll pay over the life of your mortgage.
Your estimated monthly payment
- pay one 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate by 1% would save you $51,562.03
- Pay an extra fee $500 each month would reduce the term of the loan by 146 month
Click “More Details” for tips on how to save money on your long-term mortgage.
Is it better to rent or buy now?
Whether you should rent or buy depends on current costs in your area and your lifestyle. In some parts of the country, it’s possible to get a mortgage with a monthly payment below the average rent, but that’s not true everywhere, especially if you’re in a high-cost urban area.
If you’re concerned that your rent will continue to rise, it might be a good idea to consider buying a home. Although rents can go up from year to year, if you have a fixed rate mortgage, you know you’ll be paying the same amount every month for as long as you have your mortgage.
“I still believe we’re in a market where it pays to buy or own,” says Ralph DiBugnara, president of Qualified at home and Senior Vice President of Cardinal Financial. “Higher rates mean less buying power in some cases, but rents are rising as fast or faster than house prices due to inflation, making buying the most ideal option. for many.”
How are mortgage rates determined?
In general, mortgage rates tend to be high when the US economy is booming and low when it is struggling. Mortgage rates hit historic lows during the pandemic as
Your mortgage rate will be influenced by both current rate trends and factors you can control. With a good credit score, a low debt ratio and a substantial down payment, you can get a better rate.
How can I find personalized mortgage rates?
Some mortgage lenders allow you to customize your mortgage rate on their websites by entering your down payment amount, zip code and credit score. The resulting rate is not fixed, but it can give you an idea of what you will pay.
If you’re ready to start buying homes, you can get pre-approved from a lender. The lender makes a firm credit application and reviews your financial details to lock in a mortgage rate.
How to compare mortgage rates between lenders?
You can apply for prequalification with several lenders. A lender takes a general look at your finances and gives you an estimate of the rate you’ll pay.
If you’re further along in the home buying process, you have the option of seeking pre-approval from multiple lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.
The pre-approval request requires a firm credit application. Try to apply to several lenders within a few weeks, because consolidating all your hard credits in the same amount of time will hurt your credit score less.