8% mortgage rates coming?
BIRMINGHAM, Ala. (WBRC) - When Sara and Clay Conner were house hunting in 2022, they knew mortgage rates were going up and were determined to find something before rates hit 6-7 percent.
“We may have had to buy a smaller home due to the rising interest rates,” they said.
But their 5 percent rate now looks like a bargain compared to what has happened this summer. The average fixed rate 30-year mortgage hit 7.4 percent last week.
That adds almost $1,000 a month to a $400,000 home, compared with two years ago.
And it leaves buyers like Carol Rayheim doubly frustrated by high rates and high prices.
If you are frustrated by these high mortgage rates, you really have two options right now.
One is to head to the sidelines and hope for lower rates next year.
The second option is to go ahead and buy a house in the hope you can can refinance to a lower rate in two or three.
Most realtors say sitting out doesn’t get you anywhere, so the financial site WalletHub suggests the following:
- Take the high rate and plan to refinance.
- Consider a lower adjustable rate mortgage or ARM.
- Look at a three to five-year balloon that locks in a lower rate for a few years. But at that point you will need to find a new mortgage.
The one good thing for buyers, higher mortgage rates will reduce your competition, as other buyers have to drop out or lower their price range.
That way you don’t waste your money.
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