Mortgage Rates on the Rise
My husband and I had a very close call last week with the rising mortgage rates. As the story goes, we purchased a house to renovate and re-sell in 2015. After seeing that it needed more work than we had bargained for, we stepped up and did that work. In doing so, we feel we did the right thing by way of the house, but we ended up spending more than we had initially planned. With that increase in renovation costs came the need to price the house higher. We put the house on the market in February 2016 and in July 2016 ended up moving into it. The offers were just too low for us to be able to break even, much less make anything for all of our hard work! So we decided to move in and wait out the capital gains tax.
We are loving the house! It fits our family’s needs really well. There is only one glitch: we purchased the home with a construction loan which has a balloon payment in February 2017. We knew we were going to have to refinance.
So, last week, we went in to meet with our lender to sign the documents and lock the mortgage rate. After several hours of going through paperwork, assets and liabilities, we signed on the refinance and locked that rate.
And wow, am I glad we did! We were still sitting around the table when I received a text saying that the interest rates had just risen! We made it in the nick of time before those higher rates hit!
The predictions for 2017 are that the mortgage rates will likely rise again a few times. We may be back over 5% by the end of 2017.
Let’s look at one example of how this may effect your purchasing power:
If you are looking at a $700,000 house budget and are planning on putting 20% down, your payment every month at 4.5% on a 30-year-fixed loan will be $2,838 (not including your homeowners insurance and property tax). If the interest rates rise to 5%, the payment on the same loan with the same amount down will be $3007, a difference of $169 each month.
If you are looking to change your housing situation, there is no time like the present!