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Front Page - Friday, March 1, 2019

A new perspective on today’s mortgage rates

Mortgage interest rates have been inching upward, and most experts predict rates will continue to rise throughout the year, even though there was a drop at the beginning of 2019.

With the average 30-year-fixed rate nearing 5 percent, some would-be homebuyers might begin to reconsider their purchase plans. However, it’s important to keep today’s rates in perspective and be confident that it’s still a good time to buy.

Beyond minor short-term fluctuations, rates are not expected to significantly decrease any time soon.

Only a decade ago, a mortgage rate as low as 5 percent would have been a better-than-average deal. Go back a little further, when average rates were mostly between 7 percent and 9 percent, and it’s quite a bargain. So, if you’re ready to buy, go ahead and lock in today’s rate.

It’s not just interest rates that are rising. If you’re considering renting because of higher mortgage rates, take a good look at rent prices, too. When more people lease homes, rents tend to go up. Consider the cost of higher rent, and take another look to see how much interest those extra dollars per month might cover.

Many factors influence the cost of a home purchase. Does the difference in payments between an interest rate around 5 percent and one a couple of tenths of a point lower put it out of reach? Can you tweak other factors to balance the costs and keep the purchase affordable? Consider whether you might:

Put a little more down so you can finance less. Is there somewhere you can dig down and find a bit more for a downpayment? Maybe look into using some of that IRA savings which you can use penalty-free if you’re a first-time buyer.

Consider a shorter-term mortgage. If you can afford the monthly payments, a 15-year mortgage will cost a lot less in interest over the life of the mortgage than a 30-year mortgage.

Weigh your “must have” factors for a house. Are there any you’re willing to let go of for a lower asking price? Would a smaller house, or the next neighborhood over from your favorite, or one less half-bath still work for you?

Shop and compare mortgage rates, fees and terms. Whatever the going rates, there will be differences in rates and fees with different lenders.

Throughout the upcoming year, housing markets should expect rates to resume their ascent, heading near 5 percent by the end of 2019.

For more information on mortgage rates and buying a new home, contact the Home Builders Association of Greater Chattanooga or visit www.nahb.org/forconsumers.