Plan of actionAs the possibility of higher rates grows stronger, many mortgage professionals are urging fence-sitting mortgage shoppers to act.
Mortgage consultant Michael Becker, who works for Green Pastures Mortgage & Finance in Lutherville, Md., says consumers should keep an eye on the calendar. Several federal programs set up to help homeowners and boost mortgage activity expire over the next year. They include:
Mortgage shoppers must remember these deadlines as they plan their purchases, says Becker. "While Congress may decide to extend these programs, there's no guarantee," he says. "You should at least look into these programs to see if you qualify."
Mark Madsen, a mortgage consultant at RainTree Mortgage in Las Vegas, agrees. He says first-time homebuyers especially need to remember that a failure to close on their homes before Dec. 1 will leave them ineligible for the tax credit.
"Buyers need to keep in mind that it may take several months to negotiate and close on a new home," he says, adding that delays are especially likely in foreclosure and short-sale transactions. While some home shoppers may be tempted to delay a purchase and wait for prices to fall further, such a strategy could backfire if rates jump, Madsen says.
"Waiting around for the price to go down an additional $5,000 may end up costing you several thousand dollars a year in higher mortgage payments if rates do go up a percentage point or two next year," he says.
In Maryland, Sipe is urging any homeowner with an adjustable-rate mortgage scheduled to adjust higher in the next 24 months to "exhaust every option available to get out of it."
"That would scare me to death, personally," he says. He adds that when a rate reversal finally does arrive, it's likely to be "quick and very decisive," leaving few options for homeowners desperate to refinance into a lower rate.
Cloudy crystal ballOf course, it's possible predictions of higher mortgage rates will prove unfounded. As Walters has noted, "Nobody has a perfect crystal ball." For that reason, mortgage shoppers should make buying decisions based on life circumstances instead of hunches about whether or not mortgage rates will climb, he says.
"Rates are very attractive, but I don't think they should drive the buying the decision," Walters says. "The buying decision is really driven by one's life and where they are and their dwelling needs."
David Kuiper, a mortgage planner at First Place Bank in Holland, Mich., also urges mortgage shoppers to tune out prognostications about where rates might go. Instead, it's wiser to make choices grounded in the here and now, he says.
"I want my clients to make their decisions based on fact, and not on speculation," he says. "Interest rates and home affordability are very attractive right now. It's important not to get too greedy with either one of them."