Lower Mortgage Rates in December 2022
But in the last weeks of 2022, multiple sources including CNBC report lower mortgage rates for the fourth week in a row at the time of this writing. What does that mean for people who are trying to decide whether to get started with the biggest investment of their lives?
On the last day in November 2022 CNBC reported, “Mortgage rates soared over 7% just a month ago, but since then they have fallen more than half a percentage point.”
While six and a half percent doesn’t sound like much of an improvement, it’s crucial to think long-term.
Unless you already have saved up a down payment (FHA home loans require a minimum 3.5% down from typical borrowers applying for purchase or construction loans) and have taken enough time to work on your credit, trying to hurry your way into a new mortgage loan application may not be in your interest.
And we are not alone in believing that. Some house hunters are also getting the idea that waiting could help, if CNBC is any indication--they report mortgage loan application volumes have been down, too.
Demand is lower overall compared to this time last year, too. What does all this mean? For borrowers who can’t wait to purchase a house, it means getting creative with the loan planning--you could purchase at 6.5% (assuming a qualified applicant) and plan to refinance next year if/when rates move lower.
Some choose to do this using an FHA Adjustable-Rate Mortgage, which may feature a lower introductory rate than the going rate for 30-year fixed-rate mortgages. If you have to purchase in the next 90 to 180 days, this is an option to seriously consider.
That is not an option open to all applicants. Those building a home with a One-Time Close construction loan, for example, typically get an adjustable rate during the construction phase, but the mortgage loan will be a 30-year fixed-rate loan.
Many predict falling mortgage rates in 2023, but it may take six months to get there. That can be an important factor when planning a loan in times like these. Should you wait until mid-2023 to apply for a mortgage?
That is strictly an individual choice, but some borrowers may do better than others with such a plan. Why? Anyone worried about FICO scores in the meantime has a full six months to work on those scores and establish or maintain a solid on-time, every time payment history. If you choose to act now, it’s important to have already taken such steps. If you choose to wait, maintaining that pattern of responsible credit use is a big part of maintaining or improving FICO scores.
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