Did Someone Say Mortgage Rates? What Is Going On And Where Will They Go?
Buying a home is contingent upon buyers being able to afford a loan. These funds are directly impacted by the Federal Reserve's activities on the prime rate or interest amount. If you've heard that rates are going up in 2022, not everyone may understand how this affects their lives. Take a look at why mortgage rates are rising and where this takes the average consumer into 2023.
Anyone who's walked into a grocery store today will see that everything has a higher price tag than last year. Inflation is definitely being felt across all products. To combat the rising prices, the Fed responds by systematically raising interest rates.
The government uses a rise in interest rates to calm inflation and balance out the economy. Reportedly, the Fed will continue to raise rates until a change in the marketplace can be quantified. Knowing when the economy has stabilized from rising inflation is a lesson in hindsight; the Fed won't know the nation is out of an inflationary time until it's moved entirely out of this scenario.
The Time to Buy is Now
With rates currently moving upward in quarter points, the time to secure a property with a fixed rate is now. Your rate may not be at a historically low point, but it'll still be affordable compared to future rates. The economy will always fluctuate. Take advantage of the present rates by locking in a loan. Most banks hold or lock an interest rate for you when underwriting is in process. Your loan can go through after a month or two with a good rate.
If you're thinking of waiting even a few months to buy a home, the rates may be even higher then. The Fed will increase rates every few months in 2022. It's possible that 2023 might have some increases as well. Gradually increasing the rate is how the economy can improve without shocking banks and consumers.
Homebuyers must also take their credit into consideration. Mortgage rates are on the rise, and some consumers may not qualify for the lowest rates either. As a result, a mortgage may be too expensive because low credit scores and high rates create an expensive monthly payment.
Looking at the Bigger Picture
Housing prices have historically risen over time. Currently, a property might gain nine percent in value during this year alone. This added value or equity only adds to your net worth. Securing a fixed interest rate right now can only improve your financial security. The rate may not be as low as you prefer, but the trade-off is remarkable equity over time. As you pay down the mortgage balance, the equity will rise and give you an asset that can be sold in the far future.
Take a look at homes for sale in Long Beach because now is the time to be proactive. Decide on the best property for you, and bid a reasonable amount. In time, the marketplace will balance out so that you can purchase a home for long-term prosperity.