High Interest Rates for Home Buying
Hello everyone, the present average 30-year mortgage interest rate for an American home mortgage is currently 6.72%. This is an increase of 3/4 of a point over the previous quarter. The increase in interest rates in home buying is primarily due to high inflation. However (realistically), mortgage interest rates are not much higher than they were several years ago and are still considered favorable. It is still possible to purchase a home at a fair price.
The key is to have a home purchasing budget and to have the discipline to stick to it. The other option would be to wait until housing inventory increases and interest rates drop. In Maricopa, Arizona, several homebuilding projects are going on simultaneously. These projects include single family homes as well as condominiums, and townhomes. If a buyer chooses to wait until next year, there could be a substantial drop in interest rates and increase in housing inventory.
Please be aware of the various products that a mortgage company can offer. Based on personal experience, I would not recommend an "ARM" or Adjusted Rate Mortgage to anyone. ARMS offer mortgage rates at a lower percentage rate than the present average rate. However, the rate is for only a few years, and you will have to refinance (for example 5 years) to avoid an increase above the average or even worse a balloon payment.
Balloon payments are usually due at the end of the loan and are usually tens of thousands of dollars (A BAD DEAL). Mortgage finance officers usually offer ARMS
as a way to increase their commissions. ARMS are not to the long-term benefit of the buyer.
Your best bet is a Fixed Rate Mortgage. If you are fortunate to get a low rate, the rate remains constant during the life of the loan. Another option is for Military Veterans. A VA loan has a cap of 6%. A veteran cannot be charged more than 6% (regardless of the market.)
A 15-year fixed is currently at 5.86%. If you can afford a 15-year mortgage, you can own a home in half the time.
Jumbo Loan - Jumbo loans are home loans which allow the buyer to purchase a home that exceeds the maximum conforming loan limits set by the Federal Finance Housing Agency (FFHA). In layman's terms having a buying limit of say 500k and purchasing a home that is valued at 600k. Jumbo loans require larger down payments and have higher interest rates (personally, not recommended.) I would say stay in your comfort zone.
Anyway, for the readers, I hope this information helps.