We’ve heard this before, but the 2018 mortgage rate forecast remains the same: Mortgage rates are expected to rise. Even though interest rates are hard to predict, many industry sources agree that rates could rise significantly by the end of 2018. There are several reasons why this might happen, including continued increases by the Federal Reserve and a potential rise in inflation. In 2017, rates did rise for a few weeks but fell again.
Even though mortgage rates ended lower than expected in 2017, they are still projected to increase by approximately half of one percent by the end of 2018. That means the overall cost of your mortgage could go up significantly. While a monthly mortgage rate forecast can be helpful, it’s important to remember that rates can change daily.
How Do Rising Rates Affect Your Payment?
Simply put, interest rates directly impact how much home you can afford. Many people think of rising home costs as their major expense and reason to act quickly when buying a home, but an increased interest rate can affect your budget even more. As interest rates rise, your buying power decreases because the rising rate makes it costlier to borrow the same amount of money. And, as we’ve seen, some experts* are anticipating a rate increase by the end of 2018.
Lock in Your Rate to Save
What’s the best way to save the most on your mortgage? Finding the lowest available interest rate. A lower interest rate lowers your monthly payments. When you find a good rate, it’s important to act quickly. Because mortgage rates change daily, the rate you find today may not be available in the weeks and months ahead, when your current home has sold or you’ve finally found the perfect property.
To ensure you have the rate you want when it’s time to close on your home, a mortgage rate lock is a tool you can use to keep your attractive rate for 30, 45 or even 60 days. Mortgage rate locks are a guarantee that your lender will uphold a specific combination of interest rate and points if you close on the mortgage by a specific date. Make sure you talk with your lender about their policies on mortgage rate locks. This is one way, as the borrower, you can protect yourself from rate changes during the lock period. This can be especially helpful in a year when mortgage rates are expected to rise.
Thankfully, fixed mortgage rates have remained near historic lows, giving buyers more buying power. Even though experts don’t anticipate skyrocketing rates, an uptick is a likely outcome. This could affect your ability to afford a home. If you’re definitely going to buy in 2018, locking down your interest rate is one way to help you get the most home for your money.
And, if you’re on the fence about refinancing, it still may be a good time if you act now. You can consider this rule of thumb for whether it’s to your financial benefit it to refinance your mortgage: Most lenders agree that if you can lower your rate by half of one percent, it’s worth it in the long run.
For more information about the different mortgage options offered by FirstBank, click here. You can also access helpful tools to use during your mortgage process here. To speak with a loan officer in your area, call (855) 753-6209.