How to Prepare for Interest Rates nearing 4% and Beyond

With current interest rates below 4%, purchasing and refinancing activity is as high as it's ever been. According to Freddie Mac's Primary Mortgage Market Survey, the average 30-year mortgage rose to 3.92% for the week ending February 17, 2022. According to S&P Global, the standard interest rate for a 30-year mortgage is 3.1 percent. Shorter-term mortgage types have also increased. 15-year fixed-rate mortgage rose to 3.15%. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) rose to 2.98%. Factors such as inflation, consumer spending, home prices increasing have made it challenging for potential homebuyers looking to purchase a property.

There are parts of the U.S. where interest rates have surpassed 4%. In various states, the average rates are around 4.375% which is being offered to borrowers with credit scores between 700 -719 with a 10% down payment. With mortgage rates increasing at a fast pace, there are some lenders who are working with the borrowers to secure the best rate that they can by locking in a rate as soon as possible.

If desiring to take advantage of the current interest rate before it increases further, for current homeowners, now would be the best time to refinance. Refinancing at a lower rate can save you a substantial amount of money. You can calculate how much money you'll save over the term of the loan and compare it to the fees you'll have to pay to break it. For example, if you lock in a 4 percent rate versus a 5% rate on a $500,000 15-year fixed mortgage, you will save $46,000 in principal alone over the life of the loan. Don't be afraid to inquire about refinancing opportunities with your existing lender. They'll often be eager to waive or lower fees in order to obtain your business.

Lenders have different requirements for refinancing rental properties. Most banks will require:

• 75% or less loan-to-value (LTV).

• Good payment history on your present mortgage.

• Credit rating of 660 or above.

Tax records, profit and loss statements, balance sheets, tenant lease agreements, and verification of rent payments received are all detailed financial documentation.

As interest rates continue to increase, if looking to purchase a property, now would be the best time to reach out to a realtor that can further help assist you along this process. An experienced realtor can help you every step of the way throughout the home buying process.

At Lake Ozark Realty, we have a wealth of knowledge and experience. Ozark Realty is one of the oldest and most respected Real Estate Brokerages at Lake of the Ozarks. For decades we have helped hundreds of people obtain the property that they desire. Our mission is to provide outstanding service to our buyers and sellers, as well as to create partnerships and provide leadership that results in thriving residential communities, prosperous commercial ventures, and an enriching work environment. We strive to create long-term, sustainable value for our clients and customers, as well as to improve the quality of life in the Lake of the Ozarks region. Our stakeholders include our real estate agents, employees, business partners, customers, clients, and local business establishments. Individually and collectively, the interests, goals, and objectives of all stakeholders are important to the success of our brokerage.

If you are considering selling your property at Lake of the Ozarks, contact Tanya Newberry at tnewberry@lakeozarkrealty.com www.lakeozarkrealty.com

Print This Post Email This Post

Share on Social Media: