3 Reasons to Buy a Home Before This Market Bumps Up Again!
Mortgage rates today have remained very stable but are no longer as low as they were a few months ago. Most homebuyers would agree that current interest rates are not only for the individual, but also for the whole family. Current 1st year adjustable jumbo loan rates are an example of how fixed mortgage rates can hurt the value of your home. Let’s examine why Adjustable Rate Mortgages is one of the worst options for the borrower.
If you look at what has happened to the mortgage industry since the recession began, you will see that homebuyers are being hit with a double whammy. At the same time, adjustable rate mortgages (ARM) are still pretty high. Adjustable Rate Mortgages have jumped in recent years but have been leveling off at some point. What has happened is that the ARM’s variable rate has increased and has caused a huge spike in monthly mortgage payments. In short, the borrowers who had their adjustable rate mortgages adjusted are paying more than the current market rate.
So just what is causing the jump in jumbo mortgage rates today? Well, with the federal stimulus programs running full steam and banks are less willing to lend money, many homebuyers are finding it difficult to come up with the additional funds needed to finance a major purchase. The extra cash needed may not be available through traditional means. One way out may be through refinancing, but that takes a lot of time and expense on the part of the borrower.
Another possible factor in the recent upsurge in mortgage rates may be the uncertain economic outlook for the rest of the year. Just as it was starting to become a little bit easier to qualify for home loans, those qualifying in the spring may find it harder to do so in the fall. While unemployment numbers are beginning to rise, lenders are tightening their belt-and tightening their requirements even further. If you’re in a position where you think you’ll need more time to pay off your debts, you might want to consider waiting a few months before refocusing your efforts on home purchasing.
On another note, if you are looking to purchase a new home, you may be having difficulty locating the right kind of deal. In general, the competition between banks and other financial institutions for business has heated up, and there are more buyers than sellers. Lenders are competing with one another on the strength of their respective 30 year mortgage rates today. If you don’t mind paying higher interest rates, or just aren’t interested in settling for sub-prime pricing, you may be able to secure a better deal by looking for a home in an ideal geographical location that has just begun to see growth.
National Market Areas The rise in the national average mortgage rates currently being offered to borrowers applies equally to buyers who wish to take advantage of this low rate period. Some regions have seen marked decreases in home values over the last several months. One reason for this could be the loss of manufacturing jobs across the United States. Several areas, such as the Rust Belt, have suffered from the loss of steel and auto industry jobs. Other areas that have experienced decreases in prices are seen as having benefited most from this drop.
These decreases in prices could benefit qualified buyers, especially those with good credit ratings. In the last week, the national average 30-year mortgage rates were at their lowest point since the release of the third quarter of the year. Although foreclosures are still on the rise, there is reason for hope for homeowners hoping to get a low interest rate package.
It is believed that many lenders will begin raising their prime interest rates after the current quarter of increase ends. With less demand for loans, it may only be a matter of time until they begin to offer these rates to those borrowers seeking a refinance on their current mortgage loan. With the recent drop in the national average mortgage rates, it may not be too much longer until we begin to see an increase in the national average mortgage rates. With the current economy conditions, we all know that banks and financial institutions have a lot of incentive to continue to keep their interest rates as low as possible. If you would like to take advantage of this low rate period, you need to act now.