May 4, 2023
How high can mortgage loan interest rates go? The highest mortgage rate in American history may have been recorded at a whopping 18.45%. That rate was for a 30-year fixed-rate conventional mortgage in 1981.
And what about the lowest mortgage loan interest rate? That may have been the rate we saw in December 2020; 2.68% for a 30-year fixed-rate mortgage, according to Freddie Mac.
What influences mortgage loan interest rates? Not the FHA or HUD; these two agencies do not set or regulate FHA home loan interest rates.
But other things do affect the rates, indirectly or not: Fed actions to shore up the U.S. economy (more indirectly), investor reaction to those efforts (more directly than Fed acts), whether or not the economy is growing or shrinking, etc.
Some Shouldn’t Bother Watching Interest Rate Headlines…Yet
Headlines that hint at lower home loan rates to come don’t mean anything until you are ready to commit. If you are not prepared to buy, don’t worry about those numbers or give in to the fear of missing out on a good deal.
But what about when the tune is right to apply for the loan and buy the house? That is when borrowers are more likely to be affected by changes in the mortgage loan interest rate.
When Refinancing an FHA Loan
Refinancing a loan you got before the interest rates started rising may be disappointing; the interest rate range pre-pandemic is not available at press time, even in a housing market that seems to be making efforts to recover from 2022. But housing market cycles don’t last forever.
Are you refinancing your FHA mortgage with the mind to pull the home’s value out in cash?
You may not be as worried about mortgage loan interest rates as the person who would prefer a no-cash-out or Streamline FHA refinance loan option motivated by a lower monthly payment or interest rate.
Discuss their financial goals with a loan officer. It may make sense to wait until rates have crept closer to five percent and determine what makes the most sense.
Home loan interest rates are governed in part by forces beyond our control; it pays to look for consistent trends among rates before deciding whether we’re in a recovering housing market or not.
Negotiating A Purchase
If you want to commit to a piece of real estate but don’t have a mortgage loan interest rate lock commitment with your lender? Potentially changing interest rates could work against you.
A mortgage loan interest rate lock is a smart move at the appropriate time. You can’t ask for one from the lender until you are ready to commit to the purchase of a specific property.
Ask your loan officer how soon until you can negotiate a mortgage rate lock. Industry rules typically have a 30-60 day window for that rate lock commitment. Any longer and you may need to renegotiate the lock agreement.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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