Mortgage Loan Rates Highest Since December 2008

[Jun 5, 2009.]

 

Rates for  30 year fixed rate (FRM) mortgage loans rose from 4.91% to 5.29%, the highest since last December. The National Association of Realtors notes shows that sales of existing homes rose by 6.7% in April, which is attributed to lower mortgage rates allowing more buyers to qualify for a mortgage loan. Although homeowners seeking refinancing may be taking a "wait and see" attitude, mortgage applications for home purchases increased by 4.3%, while applications for refinancing fell by 24%  for the week ending May 29 according to the Mortgage Bankers Association.

Mortgage Rates: Do Not Pass "Go," or Go for It?

Prospective homebuyers or those in the market for refinancing may be inclined to wait and see what happens with rates, but this could be a bad decision if rates continue to increase. Here are some things to consider when deciding if it's the right time to buy a home or refinance your mortgage:

• Are you ready?: Taking on a mortgage loan is a major financial responsibility. If you've saved enough for a down payment, have little or no consumer debt, and have a credit score of 740 or above, you will likely qualify for the lowest mortgage rates. If you're thinking about buying a house only because rates might increase, that's not a good reason for buying a home.


• Forget the "What if's": What if rates rise? What if I wait, and lose my job? What will my parents say if I don't accept their offer to help me buy a home right now?  What if we can't afford to buy after we have kids? These kinds of questions may inspire you to jump out of your recliner and go house hunting, but wait. Buying a home is a decision that should be made by you (and if applicable, your significant other). The only reason to buy a home is that you want to buy and are financially prepared. Jumping in to buying a home based on worrying about rising rates or advice or pressure from others can be disastrous.


• Current rates aren't that bad: About ten years ago, rates for a 30 year FRM were about 8%. When considered in this context, today's mortgage loan and refinancing rates are still a great deal.


• Ways to get lower mortgage rates:  If you can afford higher monthly payments, you may qualify for a 15 year FRM, which typically offers rates slightly lower than rates for a 30 year mortgage loan. Making a larger down payment, having a high credit score, and paying "points" at closing may also help lower your mortgage rate.

Shop lenders and compare rates and terms. Consulting a mortgage broker may help in locating the lowest mortgage rates and other attractive options for mortgage loans and refinancing.

 

About Author:

Peter Andrew has been writing about--and for--business for more than two decades. For the last couple of years, he has found himself increasingly specializing in the U.S. financial sector.