You may have been told by a real estate agent that you will date the rate but marry the house. The idea of buying a house now and planning on refinancing to a lower rate later on does carry some risk.
Mortgage interest is front-loaded, which means that the borrower pays the most interest on the first payments. Refinancing means starting over and paying more toward interest and less toward capital, which means less equity.
As a rule of thumb, wait until rates go down by 2% before refinancing. That way, refinancing will pay off. Rates will not go down much while Trump is president due to his economic polices.
People who buy houses now have no guarantee that when rates are lower in five or six years that they will have a job. Jobs come and go but mortgage payments can last for decades, which is one heck of a long date.
Buying a less expensive house is one way to keep mortgage payments lower. Another strategy is to save up for a large down payment.
When the news headlines exclaim that mortgage rates are lower, that doesn’t mean they are low. It means that they were recently higher. Right now, they are about what they were a year ago, when they were at 6.77%.
These rates are averages. You may qualify for a lower rate or for a higher rate. Ask your lender.
tachment_27870″ align=”aligncenter” width=”900″] Freddie Mac – average rates[/caption]
