Pandemic-induced low mortgage rates are soon to be a thing of the past, as experts say that rates are on track to hit 5 percent in the near future. In keeping with these trends, you’ll want to check out the latest expert strategies on how to get a good rate, among other topics like choosing the best type of refinance.
1. Mortgage rates expected to top 5 percent soon
Mortgage rates sank during the pandemic, but times are changing. Following the Fed’s move to raise rates last week, experts now predict that rates will reach 5 percent as soon as next month. Contributing factors include inflation, the war in Ukraine, and the resolution of the pandemic recession.
2. Steps to getting the best mortgage rate
It’s important to get the best mortgage rate possible, since a difference of a fraction of a percentage point could add up to thousands of additional savings or expenses over the life of the loan. You’ll want to show lenders that you can reliably make payments, so work on boosting your credit score and building a stable employment history. It also helps to save up for a sizable down payment and consider a 15-year mortgage. No matter how competitive your profile is, you’ll still want to comparison-shop among lenders.
3. Choosing the right type of refinance for you
Refinancing can support a number of financial goals, such as eliminating private mortgage insurance and reducing monthly payments. When refinancing, you’ll choose between options such as a rate-and-term refinance, where you alter the rate and term of your loan, and a cash-out refinance, where you tap your home equity. During your decision-making process, you’ll need to evaluate how much you’ll pay in closing costs, how much your new monthly payment will be, and how long you plan to stay in the home, among other factors.
4. Finding a VA lender
A VA loan is an affordable path to homeownership, allowing veterans to buy homes without the burden of down payment and private mortgage insurance requirements. To get started, confirm that you qualify for the program, and do your homework on the lenders in your area. Lenders will offer a variety of different rates, so shopping around could save you thousands in the long run.
5. Buying vs. building a house
If you build a house rather than buying, you’ll get the opportunity to live in a brand-new home that’s customized to fit your needs, but it will come at the price of your time and labor.