In January 2022, mortgage rates hiked to their highest level of 3.76% since March 2020. Due to this rise, many people still on the fence about buying a house have become actively interested in home financing. It’s because, despite the recent increase in the rates, they are still below what they were before the pandemic. 

Today, experts are explaining the rising mortgage rates with the increasing inflation. Many believe that the Federal Reserve will ease off the pandemic-related financial policies, such as hiking short-term interest rates beyond zero.

Moreover, the Omicron variant of coronavirus has spread uncertainty in the real estate market. Many people expect the interest rates to rise even more when the Federal Reserve raises its rates, which is expected to happen in March. It can impact the borrower significantly in terms of the loans and rates they receive and who can qualify for the loans. 

It’s why home financing right now might be a great idea. Let’s explore why!

What to Expect from the Rising Mortgage Rates and Housing Market

Mortgage rates will likely keep increasing during the year, and they can be quite volatile on a week-to-week basis. Finding a cheap mortgage plan will become more challenging as the rates increase. You might need a larger down payment to stay within the affordable range due to the rising home prices.

After all, your mortgage rate is only part of the calculation you make to ascertain whether you can afford a home or not. A lower rate partially offsets the increasing purchase price, which is why buying a house now when the rates are lower than what they can be later in the year is an intelligent choice. 

That said, you should only consider home financing when the time is right for you, i.e., you have the budget for it, you have made all the proper calculations, found the right mortgage plan, and your credit score is good.

Don’t wait out the market, hoping that home prices will go down and somehow help you offset the rising mortgage rates. Instead, if you have been sitting on the fence about buying a home, you should start looking for a mortgage that works for you as the market will not come down anytime soon. 

So, take the following actions to achieve your home financing goals:

• Determine the mortgage amount you can afford easily and continue to afford.
• Don’t rush the process; instead, survey the market and choose a lender who can provide you with the loan you want.
• Stick to your home-buying budget so that you don’t end up in financial trouble down the road.
• Choose a plan with an interest rate that works for you in the short and long run.

You can also use a reliable mortgage calculator by entering your estimated figures. It will help you determine what your monthly payment might look like and whether you can afford it. 

Refinancing Opportunities for Existing Homeowners

If you’re a current homeowner thinking of refinancing your mortgage, the rising mortgage rates can affect your plans based on your initial loan plan. Despite the higher interest rate, you might benefit from refinancing your mortgage if you have an existing mortgage with a rate that was closer to or above 4%. If you can close a refinancing mortgage with a new interest rate close to 0.75% below your existing one, you might benefit from refinancing.  

So, study your needs, and if you’ve been on the fence about refinancing, go for it since the interest rates will generally keep moving up. It might help to crunch some numbers with lenders you can trust and assess if refinancing will be beneficial for you at the moment or not. If you can benefit from a 0.75% interest rate drop, it might save you an average of $276 per month.

You might want to research a rate and term refinancing plan to help you lower your monthly payments and the amount of interest you will have to pay over the life of your loan. You could also immediately benefit from the increased equity in your home due to the rising property values if you choose a cash-out refinancing option. This option can help you pay off your high-interest debt, save for college expenses, or even fund a home improvement project. 

All you have to do is assess how your property can work in your favor. For instance, if you already have a low rate, refinancing might not be the best option for you. But if you are getting a great deal and your overall plans align with a refinancing strategy, mortgage refinancing might help you achieve your goals. You need to find a lender you can trust to offer you the best deal based on your financial credibility and credit history and guide you sincerely.

Trust Integrity Mortgage NMLS #1692497 to Find the Ideal Mortgage Plan 

 With more than 547 years of combined experience in the home financing industry, Integrity Mortgage NMLS #1692497 can help introduce you to the home financing plans that work best for you based on your distinctive needs.

Whether you want to buy a new home or refinance your home mortgage, we can sit with you to understand your specific requirements and goals, assess your financial condition, and discuss all your options in-depth with you to help you choose the ideal loan term. So, if you want to buy a home and are looking for the perfect residential loan plan, get in touch with us today!