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Some of you may have read about my desire to purchase my first home. My husband and I are planning on looking around Dec./Jan 2012 for a house in areas where we're seeing good deals. We picked this timeline because out apartment lease expires in April 2012 and we don't want to pay them $2,200 to break it.
I should qualify for a mortgage loan in Sept which is when I'll then have 2 full-times years of employment. But now the markets have just tanked and I'm hearing interest rates will rise.
But I wonder how high will they rise? When? What are the replications of this for homebuyers in the coming months? Anyone know?
We won't know the implications until we see how much interest rates rise. But in theory if interest rates rise, home prices should continue to drop as people can still only afford to make a certain monthly payment.
Interest rates have fallem dramatically on the S&P downgrade. it is the exact opposite of what would 'naturally' be expceted. Europe has had a very bad day, so despite the downgrade, investors want to be in the safest investment in the world: US Bonds.
The drop in rates today also probably reflects the reality that our economy is stuck in the mud, and the clowns in Washington are only interested in feathering their campaign coffers and could care less what happens to you and me...as long as we are around to foot the bill for their careless indiscretions.
Rates could rise, but if they do it will be from such a low level that you won't even notice the change. Maybe a 4% mortgage will be 5% by spring of 2012, but it is very unlikely that they will be much higher because our economy is so dead there is NO demand for money. Try to get a mortgage with Bank of America.....the stock is acting like they won't be around very much longer (just joking, but that is the nervoussness in the market).
Just ignore the minutae and focus on what you need and can afford. You'll be fine.
I'm in the process of signing a loan app and I believe the figures given to me were 4.31%. 2 weeks ago it was 4.5% so it's dropping. Not sure how it's going to be 6 months from now though, no one can predict that. Accurately at least.
It's not a direct and immediate correlation, but if rates were to rise, the price of homes would adjust downward to compensate. Most people buy based on what they can afford monthly. As a future first time buyer, I would rather buy when rates go up. It will be better for those with more cash to put towards buying a home, because the down payment will go farther. If you buy now and rates go up you will likely be under water, since future buyers won't be able to afford the same house payment (that's if you were to sell in the near future). If you buy when rates are higher and they go down, you can refinance. You can refinance the rate, but not your principal.
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