On the fence about buying a home? It might be time to choose a side.
Last week, mortgage rates reached their highest level since January and saw their largest week-over-week increase since the summer of 2013.
Following this month’s election, “investor expectations of faster growth and higher inflation are driving the jump up in rates, and rates have now increased for five of the past six weeks,” according to David H. Stevens, president and CEO of the Mortgage Bankers Association.
Mortgage rates have fluctuated over the last few years and have stayed historically low, but several factors point to continued increases. Among these are a stronger economy, the Federal Reserve’s influence and a shifting political climate. Some experts even think mortgage loan rates won’t be this low again in current borrowers’ lifetimes.
The moral of the story is that now may be your last chance to lock down some of the lowest mortgage interest rates we’ve seen in decades.
How do mortgage rates affect long-term home costs?
How much of a difference does 1 percent make, really?
Let’s say that tomorrow you start the mortgage loan process, and you qualify for a 30-year fixed-rate loan for $300,000 with 4% interest.
If you wait until next year and get a 5% interest rate, you’ll pay over $64,000 more over the life of the loan. And if you wait until rates hit 6%? You’ll pay $131,906 more.
Over 30 years, that might not seem too bad — until you add up the monthly difference. A $1,432 payment at 4% increases by $178 per month at 5%, and by $367 per month at 6%. Ouch. That’s hundreds of dollars of your monthly budget eaten up by a seemingly small change in your loan terms.
Moving off the fence
Fences are nice. But why sit on one when you could be building one around the home you own and love? If you’re ready to see what life off the fence might look like, talk to an Pinnacle Capital Mortgage Advisor. Our advisors are knowledgeable about market trends and news, and we can help you decide whether purchasing a home is a smart move for you. For your free, no-obligation consultation, contact us today.