February 23, 2018 | Karen Alati
Wow! What a year it has been already. Just these first few weeks of 2018 have been full of economic data that have caused mortgage rates to rise sharply.  We knew it was coming. After nearly a decade of record lows, it was inevitable that we’d see rates begin to creep up.  But what does that mean to someone who wants to buy a home?

This week, the Fed minutes revealed that Fed Committee members intend to raise the Fed Funds rate three or more times in 2018.  The Fed Funds Rate is not the same as a mortgage rate, but historically we see that mortgage rates follow that same trend as the Federal Open Market Committee attempts to control Inflation.

Currently, a 30-Year conforming loan rate is at 4.625% or so, depending upon credit score, down payment amount, property type, points paid, and other factors.  That is a jump of about 0.375% in just a matter of 3 weeks.  For a person looking to buy a home in the $400,000 price range, this just increased their monthly payment by roughly $71 per month.  (I assumed a 20% down payment.)  To some, that doesn’t sound like much. But to others, it might be enough to push them over the maximum debt ratio & therefore impact what they could be approved to buy.

So here is my recommendation.  If you are in the market to purchase a home, consider your realtor and your loan officer part of your team.  Stay in close communication with each of them about how much you’re approved to buy, and more importantly, how comfortable you feel about that monthly payment. Avoid adding to credit cards or making any big purchases. Knowing if you’re right up against your maximum purchase price is important, and leaving yourself a little wiggle room in case rates increase is always a prudent move.
 
Jennifer Kelly, Sr. Mortgage Advisor
Guild Mortgage, Company NMLS 3274
Individual NMLS 129984
(503) 701.1035   Jen@JenniferJKelly.com
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