Mortgage rates hit their highest point in over two decades this year. There. we said it. But that’s not the end of the story.
Here’s why.
Even though interest rates are higher than many of us would like, you can still go after your homeownership dreams and save on a mortgage. Here’s what we’re sharing with prospective homeowners this November.
1) Consider an adjustable-rate mortgage (ARM).
An ARM is a great option for a monthly payment that’s lower than the payments available with fixed-rate loans or for buyers convinced rates will drop by the time the introductory period ends.
Keep in mind that a year from now, some experts are predicting 30-year rates will be around 5.25% and 15-year rates around 4.875%.
2) Pay for points to buy down the rate.
If you have extra funds at the time of purchase, you can pay for mortgage points. With mortgage points, you pay a percentage of the loan upfront in exchange for a lower interest rate — and a slightly lower monthly payment.
Just make sure you calculate your break-even point. If rates drop and you can refinance before you hit the break-even point, buying down your rate may not be worth it.
3) Work on your credit score.
If time is on your side before applying for a mortgage, improve your credit by paying bills on time, lowering your credit utilization (using under 30% of your total credit line!), reducing credit card debt, and addressing credit report errors. In the long run, a higher credit score will save you on your mortgage.
4) Shop around.
Always, always, always shop around for your mortgage. Same thing goes for homeowner’s insurance. Rates and premiums vary widely, so talking with multiple lenders and carriers will ensure you have the best price on both.
If you’re interested in learning more about how to keep your mortgage payment low, we’d love to chat and help you explore your options to find the best solution for your needs.
“Bringing You Home to the Good Life”
Morrison Bifford Real Estate Group
Royal LePage Locations West Realty
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