Mortgage rates now a buyer stumbling block

By Qiong (June) ZhangNo Comments

http://finance.yahoo.com/news/mortgage-rates-now-buyer-stumbling-103013063.html

Mortgage rates used to be the least of home buyers’ worries. But a recent interest-rate spike is turning the factor of rising home-loan rates into a widespread concern.

Rates on 30-year fixed-rate mortgages averaged 4.37% for the week ending July 18, according to Freddie Mac’s weekly survey of conforming mortgage rates. That’s down slightly from the average a week earlier, but up more than a percentage point from early May.

Of the respondents who plan to buy a home someday, 13% said a mortgage rate of 4% would be too high and 20% said a mortgage rate of 5% was their limit. Another 22% said rates would have to reach 6% to discourage them from buying a home

Many in the mortgage industry think the Federal Reserve may still be buying bonds, helping mortgage rates to stay low, for the next three years or so.

While fixed-rate loans have experienced large swings, adjustable-rate mortgages haven’t been quite as volatile. People planning to live in a home for no more than five to seven years might view an ARM as a good choice, since they will likely move before the rate resets.

Don’t panic if you’re home shopping right now. Rates might not be at the bottom, but they’re still very low.

Better yet, by getting preapproved before you’ve even started home shopping, you can get a sense for how the lender treats you and decide whether you want to stick with them until closing.

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