Mortgage Rates are Knocking at Affordability's Door - We have a Solution.

Posted by Austin Shumaker on Nov 19, 2018 1:24:52 PM
Austin Shumaker
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Mortgage rates are rising. It's a scary time - that's why we've partnered with a lender to make it simple, easy, and smart to get the best rate on your mortgage.

Many lenders are offering rate locks for up to 90 days. Here's what you need to know. Interest rates are rising - that much we know. It's become a nuisance for buyers and sellers alike. For buyers, higher rates mean higher monthly mortgage payments. For sellers, higher rates equate to a smaller pool of buyers who can afford to purchase their property at the desired sale price. Rates have come knocking at affordability's door.

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So, how does one navigate these strange waters? Lenders have started to offer a program that allows you to lock in an interest rate for 60-90 days while you shop for your home, protecting both your interest rate and your ability to qualify for a certain price point.

What's a rate lock? A rate lock is an agreement between a borrower and a lender that allows the borrower to lock in the interest rate on a mortgage over a specified time period.

What's the catch? The catch is this: yes, it is more expensive. HOWEVER, here's how the numbers shake out.

Let's say you've got a 200,000 home that you're wanting to purchase with 20% down for 30 years. And let's say the interest rate is at 4.875%. Just a .25% rise in interest rates will make your payment move up $24 per month. Over a 5 year period, that equates to $1440. To "lock and shop" by comparison, a 0.30 percent fee to lock in the 4.5 percent rate would be $480 and would preserve your interest rate for 60 days while you shop.

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So, what's the answer? Should a buyer rush to enter the market before rates go higher? If you have found your dream home or are close to finding your dream home, get in while rates are low.

For sellers, keep in mind that as rates go up, buyer affordability and, subsequently, property values go down. It's a good time to move that house.

Interested in "locking and shopping"? Contact us today. 

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Below is a market snap shot of the Lafayette Parish market from our friend Amel Kates with District South Real Estate.




Topics: Interest Rates

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