A rate hike is coming, but don't let it scare you off
Posted on Tuesday, August 25, 2015 at 10:19:17 AM
It is more likely than not that the Federal Reserve will bump up its benchmark interest rate within the next month or so, which means rates on mortgages will also rise. Prospective homeowners will have to make sure they're ready for a potential rate hike as they seek residential financing.
With rising rates almost certainly coming in the near future, individuals who hope to purchase a home soon should prepare. One option for homebuyers is to begin applying for mortgages sooner rather than later. Though home loan rates are expected to rise closer to 5 percent within the next month or so, they remain just below 4 percent for 30-year fixed-rate mortgages. The window to capitalize on these historically low rates is fast closing, and people who have the resources to take advantage of them as soon as possible should do just that. However, don't rush into a loan - do your research first.
If you cannot afford to apply for residential financing before interest rates rise, don't rush into a home loan anyway. While rates are expected to rise, they won't grow prohibitive for most buyers. Greg McBride, chief financial analyst for Bankrate.com, told the Washington Post that although interest rates are set to rise closer to 5 percent, the change won't be so significant that it will scare off many homebuyers. Residential financing will remain affordable for a good chunk of people looking at homes, even after a rate hike.