Because interest rates have been so low for so long, you can’t blame people for believing this is the norm.
But families who financed homes in the 1980s know otherwise. In fact, if it were 1980, you would be looking at mortgage rates that were in the 13-15 percent range, as opposed to today’s rates of 3-5 percent.
Rates can and do swing widely.
While it’s unlikely that rates will increase to this level anytime in the near future, if you’re purchasing a property in 2016 (especially if you are a first-time buyer), you may want to discuss your home financing options with a mortgage professional.
Renters in particular should be concerned about predictions that rent increases nationally are expected to outpace increases in housing prices in 2016; as a renter, at least get a picture from a mortgage professional of the alternatives available to you in the current low-rate environment.
The state of interest rates is really only one factor of many you need to consider if you are buying a home in the near future.
You also need to be aware of other factors that come into play, including your assets and your credit.
Down payments, closing costs, and other expenses incurred in the process require assets; if you need to start saving now, you’ll need to know how much.
And if your credit rating needs attention – such as paying down debt to get your debt-to-income ratios in line, or addressing items on your credit report – start now and you’ll be ahead of the game when you’re ready to launch your home search.
Even if you are planning on purchasing a home within a longer time frame (three to six months), you’ll want to discuss with a mortgage professional what may lie ahead, how to manage your expectations, and what actions to take now.