Everything You Need to Know About Mortgage Interest Rates

In general, the longer your loan term, the more interest you will pay. Loans with shorter terms usually have lower interest costs but higher monthly payments than loans with longer terms. The cost of rising rates can be limited by making appropriate loan program or pricing choices. A borrower can pay points or use a shorter term to lower the cost of interest. However, the savings may be offset by higher upfront costs or higher monthly payments.

How to Lock In Your Rate

You can prevent rates from rising further by locking in a rate as soon as you find the rate you are comfortable with. But, be careful that the rate lock period will not expire before you can close on your loan. Frequently, rate locks last for 30, 45 or 60 days, but they can be shorter or longer. If you do not lock in a rate, the rate shown on your application may change before closing.

Interest Rates Affect Real Estate Prices

When rates are rising, is it likely that real estate prices will rise too. As mortgage rates increase, owning a home becomes more expensive and sales of homes typically decline. Rising rates are a reaction to inflation. Markets will vary, yet inflation usually affects home prices too. At times, prices may rise at an even faster pace when rates are moving up.

How Interest Rates Affect Your Monthly Payment

As interest rates rise, so will your monthly mortgage payment. It’s important to closely monitor rates and if you find one that works for you, don’t delay. A rate increase of just 1% on a $200,000 30-year-fixed rate loan can increase your monthly payment by about $119.

For more information about interest rates and market conditions and how they may impact your home buying decision, reach out to First Ohio Home Finance today!

Are your ready to take the next step in financing your future home? Talk to an expert by filling out the form below.