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A Few Points about Interest Rates
Less is more
If you're new to investing or real estate and don't know the
first thing about interest rates, here's a good tip: the higher the interest
rate, the more expensive it's going to be. High interest rates mean you will
have to pay back more on the money you borrow. Another good rule of thumb is
that affordability increases if you use an adjustable rate mortgage (it's
easier to qualify this way). Of course, there will be a wide range of
prices that you can choose from, depending on what kind of financing you
choose.
Not even the Fed knows for sure
The Fed holds a considerable amount of power, but even they can't
control everything. Mortgage interest rates are affected by many
unpredictable political, economic and social events. So there is no
guarantee what direction interest rates will go, despite the forecasts of
the experts. Therefore, make your financial decision based on where things
are today, including your budget, your needs, and your future plans.
Locking in rates assures you the lowest interest
If you do decide you want to lock in at a certain interest
rate, you will need to complete a loan application and send it to your
lender as soon as possible. This must be done so that your commitment
doesn't run out before your loan is approved. Follow up and be sure that
the lender is receiving all of the necessary documentation. Get a property
appraisal, which usually costs about $300, through your loan agent as soon
as possible.
Don't obsess and miss a good real estate deal
Although rising interest rates can create more problems for
home buyers, waiting and hoping for low rates is not necessarily a smart
move. You may end up paying a higher price. Also, refinancing is always an
option in the event that interest rates come down.
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