If you're in the market for a mortgage, you might want to act fast. With interest rates on the rise, it's important to secure your mortgage now to avoid paying higher rates later. This is especially true as we move into 2023, where the average rate is in the mid-6% range.
"Act now to secure a mortgage and avoid higher interest rates later."
If you’re considering buying a home or refinancing your existing mortgage, there’s never been a better time to act. Interest rates are on the rise, and if you wait too long, you may end up paying significantly more for your mortgage than you would today. In this article, we’ll take a closer look at the current state of the mortgage market, why you should consider getting a mortgage now, and how to secure the best possible rate.
The Current State of the Mortgage Market
In 2022, the mortgage market was incredibly competitive. Interest rates were at historic lows, and many people took advantage of the opportunity to buy a home or refinance their existing mortgage. This trend continued into the early part of 2023, but as the year progressed, interest rates began to climb.
There are several reasons for this increase in interest rates. First, inflation has been rising in recent months, which has led to concerns that the Federal Reserve may raise interest rates to combat inflation. Second, the economy has been performing well, which has led to increased demand for credit. Finally, the global economic outlook is improving, which has led to increased competition for funds.
As of March 1, 2023, the average interest rate for a 30-year fixed mortgage is in the mid-6% range. While this is still historically low, it’s a significant increase from the rates we saw in 2022. This means that if you’re considering buying a home or refinancing your existing mortgage, it’s essential to act fast to lock in a lower interest rate.
Why You Should Consider Getting a Mortgage Now
There are several reasons why you should consider getting a mortgage now, rather than waiting for rates to increase even further.
- Lock in a Lower Interest Rate
By getting a mortgage now, you can lock in a lower interest rate than you would be able to if you waited. This can save you thousands of dollars over the life of your loan. For example, if you take out a $300,000 mortgage with a 30-year term at a 6.5% interest rate, you’ll pay approximately $463,000 in total over the life of the loan. However, if you secure a 5.5% interest rate, you’ll pay approximately $391,000 in total over the life of the loan. That’s a savings of over $70,000!
- Take Advantage of the Current Housing Market
While home prices have risen over the past year, they may continue to do so in the future. By getting a mortgage now, you can secure a home at a lower price than you would be able to in the future. This can save you money on the purchase price of your home and potentially increase the value of your home over time.
- Lock in Your Monthly Payments
With a fixed-rate mortgage, your monthly payment will remain the same over the life of the loan. This means that even if interest rates rise in the future, your payment will not increase. By getting a mortgage now, you can lock in your monthly payment and avoid any surprises down the road.
- Increase Your Purchasing Power
By getting a mortgage now, you can increase your purchasing power. With interest rates at historic lows, you may be able to afford a more expensive home than you would be able to if rates increase in the future. This can give you more flexibility when it comes to choosing a home that meets your needs.
How to Secure Your Mortgage Now
If you’re ready to secure your mortgage now, there are several steps you can take to ensure you get the best possible rate.
- Get Pre-Approved for a Mortgage
Before you start shopping for homes, it’s a good idea to get pre-approved for a mortgage. This will give you a better idea of how much house you can afford and will also show sellers that you are a serious buyer. To get pre-approved, you’ll need to provide your lender with some basic financial information, such as your income, debt, and credit score. Your lender will use this information to determine how much you can borrow and what interest rate you qualify for.
- Shop Around for the Best Rates
Don’t assume that your bank or credit union is the only place to get a mortgage. It’s a good idea to shop around and compare rates from multiple lenders. This will give you a better idea of what interest rates are available and can help you find the best deal. You can do this online or by working with a mortgage broker who can help you compare rates and find the best lender for your needs.
- Consider Different Types of Mortgages
There are several different types of mortgages available, including fixed-rate mortgages, adjustable-rate mortgages, and FHA loans. Each type of mortgage has its own pros and cons, so it’s important to understand the differences and choose the one that’s right for you. A fixed-rate mortgage offers a consistent interest rate over the life of the loan, while an adjustable-rate mortgage offers a lower initial rate that can adjust up or down over time. An FHA loan is a government-backed loan that can be a good option for first-time homebuyers or those with lower credit scores.
- Improve Your Credit Score
Your credit score plays a big role in determining your interest rate. The higher your credit score, the lower your interest rate will be. If your credit score is less than ideal, take steps to improve it before applying for a mortgage. This can include paying down debt, disputing errors on your credit report, and making sure all of your bills are paid on time.
- Consider Making a Larger Down Payment
The larger your down payment, the lower your monthly mortgage payment will be. It can also help you secure a lower interest rate. If you’re able to save up for a larger down payment, it can be worth it in the long run. Keep in mind that most lenders require a minimum down payment of 3-5%, so you’ll need to save at least that much before you can buy a home.
Conclusion
If you’re considering buying a home or refinancing your existing mortgage, there’s no time like the present. Interest rates are on the rise, and if you wait too long, you may end up paying significantly more for your mortgage than you would today. By getting a mortgage now, you can lock in a lower interest rate, take advantage of the current housing market, lock in your monthly payments, and increase your purchasing power. To secure the best possible rate, get pre-approved for a mortgage, shop around for the best rates, consider different types of mortgages, improve your credit score, and consider making a larger down payment. With the right preparation, you can secure a mortgage that meets your needs and fits your budget.