Mortgage rates rose again this week, partly because of worries over potential Federal Reserve increases.
Freddie Mac reported in its weekly report that rates on 30-year, fixed-rate mortgages averaged 6.67%. The rate marked the highest rate since the week ended June 13, 2002, when 30-year fixed rates were at 6.71%.
Fifteen-year, fixed-rate mortgages rose this week to 6.26%, up from 6.23% the week earlier. The 15-year is a popular choice for those refinancing a home mortgage.
The rates on one-year, adjustable-rate mortgages hit the highest level in five years at 5.68%. They were last that high in mid-August 2001, when they averaged 5.71%.
The rates on five-year, adjustable-rate averaged 6.26%, up from 6.21% the week earlier.
Housing is showing many signs of slowing after five years of record sales. On Thursday, the National Association of Realtors reported that its index for pending home sales fell for the third month in a row.
A separate government report showed a 1.1% drop in residential construction spending for April. This is the largest drop in over two years.
Frank E. Nothaft, chief economist for Freddie Mac, says there is no reason to panic. He believes that rates will go “slightly higher” and that the increase will be “gradual and orderly.”
The same week one year ago, 30-year mortgages averaged 5.62%, 15-year mortgages were at 5.20% and one-year ARMs were at 4.26%. Five-year ARMs averaged 5.10% one year ago this week.
Nothaft easily explained this week’s increase in mortgage rates.
“The Fed released the minutes of its most recent FOMC meeting, which showed that some members were concerned about inflationary pressure. This caused the bond market yields to rise, and brought about market speculation that the Fed may hike rates sooner than had been expected. All this combined to nudge rates up again this week.”
A family and a home of my own. These are the dreams of millions of little girls. The harsh reality of adulthood can push those dreams done. Many times it’s just because there seems no way. A mortgage calculator can crunch the numbers fast and show what it really takes to into a home. Savings, time and planning can make it happen.
A mortgage calculator is simple to use. You just fill in the right bits of information, and then ask it to calculate the end result. You already have the information, such as the selling price of that house you’ve fallen in love with, and the interest rates that a variety of mortgage lenders are offering. Then you input different variables into the mortgage calculator to see what kinds of payments you would need to come up with each month.
Use different mortgage calculators to find out whether a fixed rate, or adjustable rate mortgage would be better in your financial situation. Use a comparative mortgage calculator to see a clearer picture of what each would mean in the terms of real money each month. Perhaps you need steadier control over your expenditures now. A fixed rate mortgage would be best to start with the expectation of switching to an adjustable mortgage when your finances are more settled.
Take a look at the length of time you want to be paying your mortgage. Have the mortgage calculator give you the monthly payments for a variety of different options. It’s possible that a slight increase in monthly payment could substantially reduce the amount of time you’re paying for your home. This is as ideal use for a mortgage calculator as you consider options.
In conjunction with a mortgage calculator, use a home budget calculator to work out the kind of budget you realistically have to work with. Although it might seem that you can afford this home of your dreams, the reality might be very different. It sounds okay to think that you’ll go without a vacation this year. Or you could make gifts for Christmas and switch to cheaper brands of groceries in order to be able to live in this house.
But this isn’t just for one year; this is going to quite a long term commitment. You must seriously think about emergency situations. What would happen to your home if you suddenly became ill and couldn’t work, for example? Do the figures you’re using with the mortgage calculator allow for homeowner’s insurance? What about property taxes?
While you are using the home budget calculator, input a few figures that would be an rough estimate of monthly utilities for the new home. If it is substantially larger than the one you live in now, you might expect your monthly payments higher than your current ones. By using this total together with the mortgage calculator total, you can get a fairly accurate picture of what your monthly expenses would be on the new home – and whether or not you are able to afford it without putting it at risk if your finances suddenly decrease!
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