If you’re looking at buying a home this spring, it’s important to look at the mortgage rate that you could be getting. Rates are on the rise, which is leading to fewer mortgage applications being submitted.
The State of the Housing Market
Understanding the housing market will make it easier to see what’s going on as a whole. Throughout Texas, homeowners are building equity because of the rise in home values. Home-price growth is great for those who are already in homes. However, it’s not so great for those who are currently looking to buy.
There are also fewer foreclosures on the market. They are at all-time lows, which is excellent news for the banks. The late-loan levels, too, are very low. With all of this happening, it makes it easier for lenders to take chances on more people who want to obtain a mortgage.
Obtaining a Mortgage
With fewer late payments on loans and fewer foreclosures, credit is loosening from lenders. The underwriting standards from many lenders are being lessened, and this is making it easier for people to qualify for loans from various lenders.
Various factors go into the mortgage rate. This includes inflation and economic growth as well as the bond market and the Federal Reserve Monetary Policy. Unfortunately, these are all causing the rates to go up. In fact, the rates have been steadily increasing for the past year. This has also reduced the number of refinancing that has been taking place.
The bond market has been struggling to maintain stability for all of 2018. Many of the early gains from 2018 have been lost, and some from 2017 are also lost. As a result, this causes the rates for mortgages to go up.
Getting the Rates
If you’re looking to buy a home, the best thing that you can do is lock in at a fixed rate. If you choose an adjustable rate, you could end up with getting even higher rates over the next few years if things don’t stabilize. If this were to happen, you run the risk of a mortgage payment that is higher than you can afford, resulting in defaulting on the home loan.
If you can lock into a 30-year fixed with a lender, there is always the possibility of refinancing once the bond market stabilizes and the rates begin to drop once again.
Get pre-approved for a mortgage to understand more of what you can afford. It’s also possible to lock into a rate for 30 days while you shop for a home once you get the approval of a mortgage from a lender.
