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You most likely already know what a mortgage is. It’s a loan people take out in order to purchase a house. But many people do not understand how significantly mortgages are impacted by interest rates. And by extension, many people don’t realize how their monthly payments and the overall cost of their home can fluctuate with interest rate changes.
For the past several years, mortgage interest rates have been at historic lows ever since the 2008 recession that imploded the housing market. This was great for many families because for several years, low mortgage interest rates helped heal the economy and allowed people to purchase homes without spending too much money on interest. During this time, many Americans were able to secure 15- and 30-year mortgages at historically low interest rates. This was refreshing after so many people lost their homes during the housing crisis.
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Now, as the American economy continues to recover, many wonder if the low interest rates will soon be gone. Indeed it may be wise to go ahead and lock in at a low rate and buy or refinance now. Some experts predict that rates will continue to rise, as well as the cost of rent. But there’s no reason to panic or rush into the home buying process, especially if you’re not ready for home ownership. Take a practical approach. You can take advantage of an online mortgage calculator or talk to a qualified mortgage broker or expert for guidance.
The truth is, no one knows exactly what will happen with the mortgage industry. Mortgage rates do fluctuate from week to week according to research, but it’s not common for them to make large jumps on short notice. If mortgage interest rates go up, consumers who are interested in tracking it will notice a steady increase and can act quickly. Essentially, if you’re thinking of buying a house or refinancing and you’re steadily watching rates, you will most likely have time to take advantage if the time is right for you.
What’s most important is that you don’t rush into a decision to buy a house just because you fear mortgage rates today are on the rise. Homebuyers purchasing houses they weren’t ready for is part of what caused the housing crisis in 2008. Rather, focus more on your ability to afford a home. Sure, a desire for the best mortgage rate will factor into this, but unless you have a substantial down payment, a solid credit history, and an emergency fund, you shouldn’t purchase a home whether interest rates are low or not.
Ultimately, only time will tell what will happen to mortgage interest rates. Many experts say interest rates will eventually go up as rates tend to fluctuate with time. How quickly that will happen (or whether it will occur at all in 2017) remains to be seen.