Throughout 2015, interest rates on mortgages hovered around 4 percent. According to the National Association of Realtors, interest rates are expected to reach 4.5 percent by the end of 2016. Additionally, the Federal Reserve could possibly increase federal funds rate again. This will have a huge impact on the housing market.
Although rates are beginning to increase, they are still near record lows so there is no need to go on panic mode just yet. But that doesn't mean you shouldn't be careful when buying a home this 2016. Here are some tips that can help you with your mortgage.
Improve your credit profile.
Your credit profile is the first thing lenders take a look at. As you prepare to buy a home, be sure you are responsibly managing any debt you currently have. Always pay your bills on time and chip away your outstanding balances by paying more than the minimum required.
Save for a down payment.
Most mortgages require at least 20 percent down payment. If you are interested in building sizable equity, stash a hefty amount of cash. You may also ask for assistance from local down payment assistance programs.
Shop for the right lender.
The home buying process involves more than just finding a favorable interest rate. There are many lenders with appetizing offers but you have to choose the best one that can cater to your financial situation. It is important to get loan estimates from multiple lenders before you make a final decision.
Familiarize with different loan types.
A fixed-rate mortgage is not for every potential home owner. Neither is an adjustable-rate mortgage. If you plan to stay in a home to raise a family, you might consider a 30-year loan. However, if you are planning to move in 10 years or less, an adjustable-rate mortgage could better suit you.
Consult a professional.
The home buying process is a complicated one most especially for first-timers, which is why it helps to have the support of qualified professions. Reach out to a housing counseling agency approved by the US Department of Housing and Urban Development for assistance.
