Homebuyers are paying more to borrow money and purchase a home. We have tips to help you save as costs climb.
Interest rates for home loans climbed for a second straight week and set new highs for 2017.
Mortgage buyer Freddie Mac says the average 30-year mortgage rate hit 4.3 percent this week. That’s up from 4.21 percent last week and 3.73 percent a year ago.
The rise comes on the heels of a bump in the Federal Reserve’s benchmark interest rate earlier this week.
So what does the mortgage rate hike mean for potential homebuyers? According to some experts, the impact will be minimal. First American chief economist Mark Fleming tells USA Today:
“Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong.”
Smart mortgage moves that save thousands
A house is most likely to be your biggest-ever purchase, but you can put thousands of dollars back in your pocket by making smart money moves.
Pull your credit reports. Long before you start shopping for a new house or a lender, pull your credit reports and check them for errors. As Money Talks News reporter Marilyn Lewis writes, cleaning up your credit report and raising your FICO score can make you eligible for a better interest rate on your mortgage:
“With a score above 760 (FICO scores range from 300 to 850), you’ll enjoy the best mortgage offers and interest rates. The lower your rate, the cheaper your house payments will be.”
Get more great tips by reading “9 Golden Rules for Getting the Best Mortgage Loan You Can.”
Check out shorter loan terms. You might also want to consider a 15-year (or 20-year) mortgage rather than a 30-year loan. Money Talks News reporter Marilyn Lewis ran the numbers comparing a 15-year loan (with a 3.32 percent interest rate) and a 30-year loan (with a 4.1 percent interest rate). She found the following:
Although the monthly payment on a 30-year, $200,000 loan was lower — $966, compared with $1,412 for a 15-year loan — overall interest payments were substantially higher on the longer loan term.
In fact, a 30-year loan would cost you $147,901 in interest over 30 years. By contrast, the 15-year loan would cost you just $54,187 in interest.
Avoid basic mistakes. Finally, steer clear of some common errors, such as not shopping around for the best lender and failing to account for extra fees. For more, check out “House Hunters: Beware of These 6 Mortgage Mistakes.”
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