Americans looking to get a mortgage are seeing the highest interest rates they’ve seen in more than ten years.
This week the rate for a 30 year fixed rate mortgage was 5.11%.
The Federal Reserve has been making move to increase interest rates in an attempt to slow inflation rates.
The Federal Reserve does not make the interest rates for mortgage loans but it has a direct impact on their rates fluctuating.
What do interest rates changing mean for homeowners and a mortgage?
Spring is one of the busiest seasons for buying a home, and while the market is still volatile, there’s some good news.
The increased rates have lowered the amount of people trying to purchase homes.
This means the issues of supply have been lowered and there is less competition for homebuyers.
The prices of homes might not be increasing, but the interest over the term of your loan will be more.
A home worth $300,000 with a 30 year fixed rate mortgage of 5.11% would have a total interest of $287,000.
If the interest was just 2.72% like during the pandemic, the total amount for interest would only be $139,186 on a $300,000 home.
Help for first time homebuyers looking for a mortgage
There are various programs people who are purchasing a home for the first time could qualify for.
Some states offer cash assistance if you meet certain income requirements.
What you get depends on your state, like NYC which could give up to $100,000 or South Dakota which gives money based on income and home value.
Some homeowners can increase the term of their loan, making monthly mortgage payments lower.
Those who already own their home can file for forbearance with the FHA during the national emergency from COVID.
You might pause your loan payments for a year this way.
The Homeowners Assistance Fund is available to help those who may have fallen behind on their mortgages.
Another option is if you could not put 20% down on the home and took out a private mortgage insurance, you could have it removed.
You may only have it taken off once you own 20% stake in the home.
Finally, you can contact your lender to see if they have any options to offer.
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