First Time Homebuyers – Rates Going Up

We talk to First Time Home Buyer’s everyday that tell us, “We’re Looking!”  Well – here’s my advice… HURRY UP!!   

Why would I say that?  Higher Mortgage Rates especially impact First Time Home Buyers.  The Fed announced in May that they are going to change policies that have encouraged lower mortgage rates, and since they’ve done that – rates have gone up!  Attention First Time Home Buyers North Carolina Mortgage Rates have moved up over three quarters of a percent just this summer!

In addition to the increase in payments with higher interest rates – First Time Home Buyers in North Carolina need to be sure they will qualify for the higher payments.  Underwriters look at payment shock as one of the deciding factors in approving you for a mortgage.  Meaning, the underwriter is going to look at how much you are currently paying in rent,and compare that to your total house payment (the numbers above are only for principal and interest – and does not include taxes, insurance or any monthly PMI payments you might have to make).  Underwriters also look at your total payment with your current debt, and calculate a debt to income ratio for qualifying you.  A difference of over $175 can mean that you have to buy a smaller house!

The Fed is meeting this week, and they are likely to issue a statement about what they intend to do with mortgage rates.  First Time Home Buyers in North Carolina may read that The Fed says that they will not be raising rates in the next 12 months.  That’s not what the folks who are buying and selling mortgage rates will be focusing on.  Many Fed Watchers, and Economists believe that The Fed statement will include language that they are NOT going to “prop” up the mortgage backed security market much longer.

Look at the difference in Mortgage Payments as Mortgage Rates go up:

As part of the Stimulus Package to help the Real Estate Market recover, the Federal Government has been purchasing mortgage backed securities.  In fact, the government is the largest purchaser of mortgages right now.  In the statement from the Fed, they will probably talk about “tapering.”  What that means is what are they going to do in the coming months to pull back on the number of mortgages they are purchasing – and how are they going to get other entities to start purchasing them.

When this conversation of “tapering” first started at the beginning of June – mortgage interest rates were in the low 3% APR range… within 3 days we were over 4.75% APR.  That was a HUGE jump that caught many people off guard.  With The FED purchasing mortgage backed securities for the past three years, the effect has been that the more they buy, the lower rates go.  So as they’ve give our language that indicates the will not continue purchases, rates have started heading up!  The hope for First Time Home Buyers still looking for a home is that The Fed Statements will NOT move mortgage rates as high this time.

First Time Home Buyers North Carolina, remember that there are specific Mortgage Tax Credits 2013 available to you!  NOW is the time to purchase a home!  Have questions about First Time Home Buyers North Carolina Mortgage Rates?  Call us, Steve and Eleanor Thorne, 919 649 5058 or leave us a question below, we’d love to help you with qualifying for a new home! Connect with us on Facebook and Google + too!