Mortgage rates rose slightly this week, according to the latest numbers from Freddie Mac. High 30-year mortgage rates have been common over the past month or so, but the increases have been small, and they have made up for some of the time lost when rates had dropped earlier in the year. The average 30-year fixed mortgage rate rose slightly to 4.4% this week from 4.39% last week, with points increasing to 0.37 from 0.35 over that same period of time.
Why are interest rates rising?
If you’re concerned about rising mortgage rates, or if you’re looking to make a large purchase and need some extra financial support, it might be worth considering a home equity line of credit. These loans are secured by your home and allow you to borrow up to 85% of its value. So they’re significantly cheaper than conventional mortgages. Keep in mind that HELOCs come with variable interest rates that can change periodically and it may take time to access all the funds. For instance, while there is no charge for getting started on most HELOCs and balances can be transferred any time without penalty, the full interest-free advance amount isn’t available until 120 days after opening. If convenience outweighs cost for your needs, it might be worth exploring these loans first.
If you’re looking to get a loan today, try to lock it in for six months or more. With short-term rates rising and long-term interest rates remaining historically low, home equity lines of credit can provide flexible financing that doesn’t require you to refinance your mortgage. Make sure to ask about lender fees and closing costs before you agree to anything, though—many lenders will waive their origination fees if they think they’ll make money on your loan. Also consider how much money you may need: If there are less than four years left on your term and you want between $20,000 and $50,000 extra cash right away, borrowing from your home may be easiest.
What does this mean for home buyers?
Home buyers need to prepare for one of the worst possible scenarios: higher mortgage rates. There are many factors that affect mortgage rates, including expectations of changes in monetary policy and potential inflation. The rise in mortgage rates could also be an indicator that U.S. economic growth is heating up, which could make home-buying a more competitive market than it has been recently with lower borrowing costs. Regardless of why today’s average mortgage rate is up over one percentage point from this time last month (although the latest economic data does not present any clear trends), home buyers need to plan for larger payments if they’re financing their purchase with a fixed-rate loan — if they’re able to buy at all, that is.
How to find today’s best mortgage deals
The following organizations offer mortgage rates and resources for home loans. If you’re struggling to find your best loan deal, then one of these may be able to help.
#1- The Federal Housing Administration (FHA) Loan – With an FHA loan, you could qualify with as little as 3.5% down and have flexible borrowing limits. Borrowers can save thousands of dollars versus traditional mortgages on their monthly payments while qualifying based on other factors such as credit score and income limitations.
#2- Veterans United Home Loans – One way that VA loans differ from other government loans is that they are not subjected to this limitation on loan terms or rates; if approved, you can use the money however you see fit at any time without penalty.
When should you lock into your new rate?
The data is clear–rates are at all-time highs. But when should you lock into your new rate? Here are some suggestions:
– Start with a 30 day lock period if you’re looking to break ground on a new project soon or want some extra cash for your next vacation
– The 45 day lock window is best for those who need funds ASAP and don’t have time to wait around
– Upfront rates may be the right fit for people that would rather put their cash towards other things, but they’ll cost you 0.5% more per year over what was promised, which could mean big bucks
– A 60-day window is perfect for those who want to take their time, but also don’t want to miss out on today’s low rates