Current State of Mortgage Loan Interest Rates for New Homes
The Fed stepped in to curb rising inflation by increasing interest rates. Doing so indirectly affects the housing market and one side-effect of controlling inflation is an increased cost for borrowing money.
The good news is that according to multiple sources, the Fed’s actions are starting to work. Mortgage rates are starting to come down even as demand seems to also be slowing.
Is Now the Right Time to Come Back to the Housing Market?
If you haven’t started budgeting and saving for an FHA purchase loan, rushing into one is not a great idea even if prices and rates are showing some signs of moving lower.
But some are fearful that rates may not drop as low as they could go, and others worry that if they don’t act now they won’t get in on a better deal.
Consider Your Options...Carefully
Lower rates may seem like the right incentive to move into a new loan soon. But if you have not been working on your credit, lowering your debt balances, or saving up for a down payment, the lower rates won’t help.
And that’s not all--some predict 2023 could see mortgage rates dropping back down to the five percent range. Will you feel borrower’s remorse if you rush into an FHA loan today that may feature a lower rate in a few months or so? There are NO guarantees that mortgage rates will follow the predictions, but it seems clear that some changes are definitely possible.
What should you take away from this conversation? For some, it’s the idea that applying for a new loan when you are READY to do so and not before may save you money in the long run even if rates don’t fall as far as you’d like them to go.
Apply When You Are Ready for Best Results
Saving more for your down payment, improving your credit, and lowering your debt ratios could go a long way toward getting you a more competitive interest rate in general, never mind what those rates may be at press time.
Conversely, if you hurry into a loan without having worked on your credit, and without having saved up a large enough down payment?
It will not matter what the interest rates are when you apply; not being ready can jeopardize loan approval even in the best of times. And if you do get approved for a loan under such conditions you may find it costs more in the long run.
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Insuring Mortgages With the FHA Funding Fee
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