3 ways rising mortgage rates may impact you
It’s been a very interesting past few years for mortgage rates. After reaching nearly 5% in November 2018, the average 30-year fixed-rate mortgage rate dropped almost steadily through January 2021, hitting multiple all-time lows. This has been fantastic news for the many Americans who bought or refinanced homes during that period and claimed great low rates and mortgage payments.
Now, mortgage rates have started heading in the other direction, bouncing up past 3% in March. The good news is that rates are still incredibly low – 3% is below anything available before July of 2020. However, a strengthening economy usually leads to higher interest rates, and with the pandemic hopefully receding, mortgage rates are expected to rise further. Here are three ways rising mortgage rates may impact you.
If you’ve had your mortgage for more than a year or two, you may want to consider a refinance soon.
If you didn’t buy or refinance your home during the past couple years, you may still be able to lower your monthly payment by refinancing your mortgage to a lower rate. However, as available rates rise, that opportunity may disappear. Mortgage rates don’t fluctuate as quickly as the stock market, but they don’t stand still either. If you haven’t had a mortgage consultation to learn about your refinance options and benefits, don’t wait any longer.
If you’re planning to buy a home, you may want to lock in your rate now.
Buying a home sooner rather than later may save you money, and that’s especially true when mortgage rates are rising. The higher the mortgage rate on your loan for your new home, the higher your monthly payment will be, all other things equal. Thankfully, when you apply for financing with Draper and Kramer Mortgage Corp., you can lock in a mortgage rate for up to 90 days before you select a property or up to 360 days after choosing a property. If you’re thinking about buying a home, don’t wait to get in touch and discuss your rate lock strategy.
If you have an adjustable-rate mortgage (ARM), now may be a good time to switch to a fixed rate.
If you have an ARM, you should be aware that your mortgage rate and therefore your monthly payment can fluctuate. After the fixed-rate intro period for your ARM (typically five, seven or 10 years), your rate and payment will adjust every year, based in part on current interest rates. With rates going up, that means your payment could go up too. If you plan on staying in your home through the adjustable-rate period of your ARM, now may be a great time to refinance into a fixed-rate mortgage to lock in a low rate and monthly payment while it’s an option.
Want a personalized look at what your current mortgage options are? Get in touch today for a free mortgage consultation.