By Jonathan Andrew
(Mortgage Rates Trends)
Being handed the keys to a home of your own will make you feel like nothing else on Earth. Home ownership is considered the foundation of the American Dream, and if you are ready to start shopping for a home of your own, you know that you have a very big decision to make. So you need to plan your entry home market, and try to wait until mortgage rates trends are favorable before accepting a home loan.
Once you have committed to a mortgage, you will be stuck with that interest rate even if the mortgage rates trends head down, unless you have opted for and adjustable rate mortgage. Of course you don't want to wait forever to jump into the housing market, because whenever the mortgage rate trends down, more people just like you see an opportunity to purchase their dream homes. When that happens, the supply of available housing shrinks, so the sales prices of homes are likely to rise. And you may end up paying more for your home even if you catch the mortgage rates trends on the way down.
Think About An ARM
An adjustable rate mortgage, as opposed to a fixed rate mortgage, will have an interest rate which fluctuates with the prime lending rate. If the Federal Reserve lowers the prime lending rate then the interest rate you are being charged for your adjustable rate mortgage will also decrease, as will your monthly mortgage payments. So you will not be stuck with a high interest rate as you watch mortgage rates trends fall quarter after quarter.
You can determine current mortgage rates trends by reviewing financial newspapers and following the financial networks. Mortgage rate trends are tied to supply and demand in the housing market, and as the supply of available housing increases, the mortgage rates trends will head down to encourage more buyers to enter the market and clear the backlog.
If, on the other hand, the housing supply is tight, then the mortgage rates trends will head north as lenders can take advantage of the situation and people are willing to spend more just to get into their own homes. This is known as a seller's market, and mortgage lenders love it, because they make their money on the interest on your home loan.
Being Smart Can Require Patient
If you have been watching the housing market for about six months and realize that the mortgage rates trends are heading up, you would be wise to wait until you hear that the number of new housing starts is increasing. This means that the housing market will loosen in a relatively short period, and more new homes become available and the mortgage rates will eventually head down to reflect the larger home supply.
Waiting a few months for mortgage rates to drop can save you tens of thousands of dollars over the life of your home loan. And having as low a rate as possible will be a cushion in case you run into some unforeseen financial difficulty. You want to make sure you will be able to handle your monthly mortgage payments no matter what.
Don't take on the commitment involved in being a home owner unless you are sure you can meet the financial obligations involved. Paying attention to mortgage rate trends is one way to make sure you can really afford the home of your dreams.
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(Mortgage Rates Trends)
