How Rising Mortgage Rates Could Affect You
There’s no doubt the real estate market has been booming in the past year. The media is full of stories about record-breaking prices for homes, bidding wars and more.
For many of our members who already own homes or sold theirs recently, it’s great news. For our members looking to buy a home, it has been a bit tougher.
2022 will be an “interesting” year in the real estate world. If you’re looking to take out a loan in the near future to buy a home or to renovate the one you’re living in, it’s important to keep informed about current market trends and what you can expect in the coming months.
First, you should know that it’s very likely that interest rates will probably increase this year. Even if you already own a home and don’t plan to move this year, this could affect you! The reason: If you have an ARM — an adjustable rate mortgage — your mortgage interest rate may go up, which could increase your monthly mortgage payment. Fortunately, you can refinance your mortgage with CommonWealth One into a fixed-rate loan and take advantage of still-low interest rates.
If you don’t have an Adjustable Rate Mortgage, you’re in good shape — unless you were planning to take out a home equity loan to finally finish those long-overdue home renovations.
If you think you’ll need to tap into your home equity for home renovations or for another reason, like education costs or even to consolidate debt, it’s best to start that process now, before mortgage rates increase. Securing a fixed-rate home equity line of credit or home equity loan now can save you money in the long run.
For those who are planning to buy a home this year, here are two things you should definitely do:
- Get pre-approved now. It’s always a good idea to get preapproved for a mortgage before you start your search — not just prequalified. It’s even more important in a sizzling real estate market like the one buyers are facing today. A preapproval gives you a leg up on bidding wars, shows potential sellers that you’re serious about buying and helps you keep your search within parameters you can afford.
- Shop around for a mortgage. While mortgage rates are still low, each lender sets their own rates and closing costs — and those can make a big difference in your buying power. Shopping around before choosing a mortgage lender can save you money in the short term and long term.
We recommend that you start by talking to us here at CommonWealth One, because we offer home loans for qualifying members that feature competitive interest rates, an efficient and smooth application process, and the personalized service you’ve come to expect.
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