Mortgage rates are ticking up slowly from 5%, reaching an average rate of 5.3% this week. The last time rates were this high was in 2009.

When rates increase, home shoppers’ buying power decreases.

“There’s no question that homebuyers are in a tough position at the moment, especially those who have seen their affordability impacted by the shift in rates over the past few weeks,” says Robert Heck, vice president of mortgage at Morty.

If you’re a homebuyer struggling with affordability due to increasing rates, it’s important to keep your options open, Heck says.

“Buyers should continue to stay informed about the market and evaluate their options, both in terms of buying, remaining in their current home, and renting,” he says. “They should also expand the programs, terms, and down payment structures they are evaluating, exploring the widest range of potential options possible to figure out what makes sense given the challenges of the current moment.”

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Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Click “More details” for tips on how to save money on your mortgage in the long run.

Is it better to rent or buy right now?

Whether you should rent or buy depends on current costs in your area and your lifestyle. In some areas of the country, it’s possible to get a mortgage with a monthly payment that’s lower than the average rent — but that’s not true everywhere, especially if you’re in a high-cost urban area.

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If you’re worried about your rent continuing to increase, it might make sense to look into buying a home. While rents can go up year after year, if you have a fixed-rate mortgage, you know you’ll be paying the same amount every month for as long as you have your mortgage. 

“I still believe we are in a market that is advantageous to buy or own in,” says Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial. “Higher rates mean less buying power in some cases, but rent is rising as fast or faster than home prices because of inflation, making buying the more ideal option for many.”

How are mortgage rates determined?

In general, mortgage rates tend to be high when the US economy is thriving and low when it is struggling. Mortgage rates reached all time lows during the pandemic as the Federal Reserve eased monetary policy to boost the economy. But as the central bank works to fight inflation, rates have been increasing and have surpassed 5%

Your mortgage rate will be influenced both by current rate trends and factors you can control. With a good credit score, low debt-to-income ratio, and substantial down payment, you can secure …read more

Source:: Business Insider

      

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