Why waiting for mortgage rates to get better is a losing proposition
Purchasing or refinancing a house for many families is a staple of the American Dream. One of the best ways to gage affordability is getting a good interest rate which is a function of your total monthly mortgage payment…
Mortgage rates change based on the trading of mortgage-backed securities. The 10-year treasury is a good indicator of what mortgage rates are doing, but truly the best barometer is the trading of mortgage-backed securities on Wall Street.
Let’s say your wrapped around the axle when purchasing a house and it means the difference between being able to perform on a certain house in a certain neighborhood which means many future happy memories and family dreams versus a smudging difference in interest rate. When push comes to shove is a tiny smudge in an interest rate really that meaningful to you? If it is okay, but it becomes a cost-benefit what’s more important to me- my future happy family memories in this property for a tiny difference in rate?
When refinancing let’s say you’re saving $400 a month refinancing your house same scenario and you’re going to give up $400 a month for example in order to gain another $50 of what may or may not come based on what the market in may or may not do? A bird in the hand is worth two in the bush or however that same goes.
The rate is important however the ability to have a mortgage payment that you can afford in unison with your budget and income other expenses should be the driver of your decision to purchase that house or refinance your mortgage. Don’t chase over dollars to get dimes especially when there’s no dimes to pick up.
We don’t know what interest rates are going to do going forward no one does. All we can do is make a decision with the information that we have right here right now today. The question is getting affordable mortgage with what available now worth it? Is there a net tangible benefit to you and if there is does it fit within your budget? Don’t be focused on an interest rate which may or may not come back knowing that the lender might be able to just refinance you for a little or no cost in the future anyway if interest rates get to that level down the line.
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