According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage rose to 4.16 percent, up from around 3.97 percent a year ago. However, lending experts are also predicting lending rates to gradually increase throughout 2017, potentially going up two percentage points by the end of the year. While mortgage rates have been on the rise as of late, it’s still a great time for borrowers looking to buy new garden houses for sale and lock in rates now.
Sitterle Homes shares their insight into how serious homebuyers have options when it comes to financing a home and locking in the lowest interest rate.
What is a rate lock? A rate lock protects the borrower from market fluctuations. In other words, if the market rates continue to rise after you’ve locked in your rate, your mortgage will be secured at the rate it was locked. However, if the market drops you may not be able to lower your rate, which is something to consider. Rate locks are done for a period of days (10, 15, 30, 45, 60) and typically depend upon the seller accepting a purchase price. A rate must be locked at least a few days if not more before the closing. There is not a fee for a rate lock, which certainly benefits the borrow, but there may be a fraction of a percentage point price difference between lengths of rate locks, which your lender should explain. The rate offered with the length of a rate lock may also help you to decide between a 10, 30 day, or more rate lock.
Real estate experts also anticipate a rise in home prices in the coming year. A recent CoreLogic report predicts home prices will climb 5.2 percent through September 2017, yet another reason to secure financing in the near term. Given the home price increases, there is also a long-term benefit for homebuyers that buy now versus waiting, which is an increase in home equity. The average homeowner gained more than $11,000 in home-equity wealth last year, a solid indication that new homeowners will also continue to see a steady increase in home equity in 2017.