The National Association of Realtors expects average rates for 30-year fixed mortgages to increase to 4.7% to 5% by year end. But before you run to the realtor, here are 3 more-important questions to ask yourself.
1. Can I afford to buy a home?
Buying a home is a big commitment. Before trying to take advantage of low interest rates, you should be confident you can afford a home. Take a step back to figure out if you have enough savings and income for a down payment, taxes, fees and monthly payments.
2. What does my credit look like?
Credit health plays a huge role in the mortgage approval process. If your credit score isn’t where it needs to be, time may be on your side. Taking a little time to improve your credit health — paying off debt, paying bills on time, and other smart steps — can lead to mortgage approval or better rates than you might get by rushing to buy now.
3. What’s my time horizon?
Like weather changes, mortgage rate fluctuations can be frequent and unpredictable. Plus, rates are expected to rise gradually. So if you’re not quite ready to buy, there’s little harm in waiting. Don’t let the prospect of a slightly higher rate rush you into a decision you may later regret.
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