Interest rates have started to creep back up again
During the pandemic we've seen record low rates on mortgages and other loans -- but during the last few weeks, interest rates have started to creep back up again. Credible personal finance expert Dan Roccato joins FOX6 WakeUp with the scoop.
Mortgage rates aren't expected to rise sharply and could still remain near historic lows.
- Rates on 30-year fixed-rate loans hit an all-time low of 2.65% in the first week of 2021. Since then, they’ve climbed back to 2.97%. But Fannie Mae economists are projecting they'll stay right around 3% for the rest of the year.
The decision to buy a house should be based on your own personal financial situation, not mortgage rates.
- Low mortgage rates do give you more buying power when you're a homeowner. But right now, scarce housing inventories mean prices in many markets are pretty steep. If you can afford to buy a home without stretching your finances too much, it's a great time to be taking out a mortgage. But if that mortgage payment will stretch your budget, wait until you can make a bigger down payment.
If you haven't refinanced your mortgage, it's a good time to check rates to see if you could do better.
- Before refinancing, remember that you can expect to pay thousands in closing costs. The bigger the rate reduction you can get, the faster you’ll recoup those costs through savings. A general rule of thumb is refinancing could make sense if you’re able to reduce your rate by at least 1%. But if you know you’ll be in your house long enough to recoup the costs, even a half percent reduction can save you money. If you can't reduce your rate by at least half a percentage point, it could take many years before you break even on those fees.