"Mortgage rates are going up!"
Yeah........ I hear that a lot. But what does that mean and how does it affect you? Is the sky falling?? The short answer is "a little". The Federal Reserve lowered it's interest rate ("Fed Funds Rate") or the money banks pay to borrow money before they loan it to use for more.
A loan officer at Wells Fargo in Scottsdale forwarded me his mortgage interest rate sheet. I try to stay current and make an effort to look from time to time. For grins, I compared my current mortgage interest rate with the one they quoted on their rate sheet. My current rate (3.625%) is lower the one on this rate sheet.
Rates dropped before the election and rallied afterward, but they're still low. In the last ~5 years, they haven't moved very much. Yes- market fluctuations affect your buying power (up and down). (Note: the rates above are the AVERAGE for the US- they may be higher or lower depending on where in the US you live.
Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States© [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, March 23, 2017.
We're coming out of a period of historically low rates when you compare them to interest rates in the teens (Yes! 12%, 14%, 18% for mortgages) during the 1980s.
Freddie Mac, 30-Year Fixed Rate Mortgage Average in the United States© [MORTGAGE30US], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/MORTGAGE30US, March 23, 2017.
My takeaway and advice to you? Don't listen to anyone about the rates did before. It doesn't matter what rates were in the 80s if you weren't buying a house or what they were 5 years ago. The only thing that matters is TODAY. Does the interest rate and mortgage payment make financial sense for you today and for the foreseeable future? It's a yes or no answer. Period. If it doesn't work, what are your options to make it work? If there are none, do not proceed.
Make sure you ask yourself, "Which direction are rates trending?" If they're going up and you're buying, get out there and find what you need! If you're refinancing your mortgage soon, speed up the financing process unless you want to pay more for the same loan. If they're going down, you have time to lock a rate and potentially pay less. If they're stable, you have a little time to think before you make a decision.
However, you need to know the rates will always change and YOU will need to do keep doing your homework to protect your interests. You're not in it alone, you can always ask for help (me, a lender, a trusted friend or family member). Make sense? ;)
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