With a perfect storm of low interest rates, high demand and restricted supply in the housing market starting in 2020, we saw a rush toward home buying over the past two years. But now, since the Fed raised the prime rate and caused average mortgage rates to tick up this year, potential buyers are wondering if it’s a wise time to take on a new mortgage.
With headlines constantly reporting so-called rate hikes and a looming recession, it’s no wonder you’re hesitant to get a mortgage. But now might not be as bad a time as you think to get a mortgage.
Why Get a Mortgage Now
Though mortgage rates have gone up several times this year and experts expect the Fed to issue at least one more increase this year, rates don’t go up forever. The Fed uses its rate increases toward a specific goal: to keep the economy stable and reduce inflation. It’s seeing some success, and interest rates will likely level out soon — and eventually come back down.
Fluctuations are normal in our economy, and in a few years, there’s a good chance mortgage rates will drop again. At that time, plan to apply to refinance your mortgage and aim for a lower interest rate to save money over the remaining life of the loan.
In the meantime, keep an eye on your credit score and savings accounts to keep your finances in tip-top shape, so you’re prepared to get the best deal possible when you refinance.
If you’ve got the resources or access to gift funds, you can also plan to put down a larger down payment to reduce the size of the mortgage you take out and keep your monthly payments low.
Home Prices Are Coming Back Down
Along with the economy stabilizing and mortgage rates eventually flattening, the real estate market is finally leveling out now, too. In July, home prices ticked down for the first time in three years, according to analytics firm Black Knight, as CNBC reports.
The decline in average home prices was small, 0.77%. But it’s a sign that the market is leveling out. Prices have stopped rising in many places and are even coming down in some areas of the country.
Lowering home prices mean the market is slowly becoming more favorable for buyers, and you won’t have to take out as large of a mortgage to purchase your home. Regardless of interest rates, a smaller loan means smaller monthly payments for you. That could give you the chance to pay off your mortgage faster and reduce the impact of interest by paying above the minimum. Or you can just rest easy with an affordable monthly payment.
Community Development Home Loans for Non-Traditional Borrowers
Worried about getting a mortgage at any time because you have hard-to-document income or need to tap into gift funds?
Quontic’s home loans give you access to unique mortgage solutions. Our Community Development Loans1 are well-suited for folks who are left behind by traditional lenders because you need extra support with paperwork. We look at your full financial profile, not just your income statements, and help match you with a loan that fits your lifestyle.
As a mission-driven federally designated Community Development Financial Institution (CDFI), we’re one of just a handful of institutions that can make these types of loans. This lets us level the financial playing field and make mortgages more equitable.
This is not financial advice, nor should it constitute or be construed as instruction for any individual reader, or group of readers, to act or make a decision in any financial capacity. Seeking independent, professional consultation from a qualified and licensed expert is always the optimum avenue in making financial decisions.
Disclaimer:
1All lending products are subject to approval. Rates, program terms & conditions are subject to change without notice. Not all products are available in all states or for all amounts. This does not represent an offer to enter into a loan agreement. Other requirements, restrictions & limitations apply. Information is accurate as of December 7, 2022 & is subject to change without notice.
