We keep hearing that now is the time to buy, partially because interest rates are so low right now. However, unless you are purchasing an inventory new home, today’s rates might not be what your rate is when you go to settlement. What to do?
The most important thing to realize is that no one has a crystal ball and no one can tell you without a doubt what will happen with interest rates over time. Fortunately, there are some indicators that can give you an idea of where they could be headed – the economy, inflation rates and the Federal Fund Rate. Unfortunately, we aren’t all Economists so understanding how all of these factors affect your interest rate can be complex.
I found an article that very nicely explains all of this. While a bit lengthy, the article How Interest Rates Work really breaks everything down in very simple terms. If you really want to know how everything is woven together, I would suggest you check this out. The forecast right now is for rates to stay relatively low but how long that will last is anyone’s guess. But…if you can at least understand the forces behind the rise and fall of interest rates, maybe it will give you some peace of mind with what to expect. And if that peace of mind isn’t quite enough, it never hurts to ask your lender if they extend rate locks!
Happy House Hunting!