Why You Shouldn’t Worry About Rising Interest Rates

When mortgage interest rates rise, you may be tempted to put your home buying plans on hold, but there are three reasons you shouldn’t let higher interest rates deter your home buying plans.

    1. Interest rates fluctuate. Mortgage interest rates rise and fall based on the lender’s viewpoint toward the economic outlook. News that suggests a slowing economy tends to bring rates down, while a rosy manufacturing or jobs report can send them back up.

Solution? When you shop for rates, shop at least three lenders using the same type of loan – 30-year fixed rate, adjustable, hybrid and so on. Do so at the same time because rates can change as much as several times daily.

    1. You have some control over rates. The rates you see advertised aren’t what you’ll necessarily pay. They’re available only to those with the best credit histories, those who are able to put at least 20 percent down, and those borrowing well within their means.

Solution? Talk with your lender about ways to improve your credit profile. If you’re stretching to buy a home, expect to pay higher interest rates.

    1. Rates are currently a bargain. Between 1972 and 2008, mortgage interest rates averaged about nine percent annually. Today, they’re around four percent. A 1/8th point translates to about $25 or less a month in monthly payments on a conforming loan, or $9,000 over 30 years in tax deductible costs.

The solution? Have some perspective. Home buying conditions change constantly. Focus on building equity with the lifestyle you want instead.