If you’re thinking about purchasing a home, financial experts recommend that you act sooner rather than later. This article from Bankrate explains why.
Interest rates may be at historic lows, but most financial advisers agree they can’t stay low forever. While the Federal Reserve is still talking about increasing interest rates, there are a few moves that savvy consumers can make to get their financial house in order before those low rates are history.
“The general consensus is that rates will rise. Nobody expects it to be a dramatic shift, but the clock is ticking on today’s low rates,” says Craig Martin, director in the mortgage practice for J.D. Power and Associates.
The first thing you should think about when it comes to rising interest rates is your home. That’s because over the course of a 30-year fixed-rate $200,000 mortgage, half of 1 percentage point of interest means a difference of almost $20,000.
Financial advisers agree that if you are on the fence about buying or refinancing, now is the time to act.
“If somebody had a mortgage, that would be one of the first things I’d talk about,” says Tony D’Amico, CEO of financial advisory firm The Fidato Group.
However, Martin cautions that just because rates are low doesn’t mean you should jump into a mortgage without thinking everything through. “Do it for the right reasons,” Martin says.
He says the loan product that makes the most sense depends largely on the situation of those involved.
“If you are in your mid-20s and you think you will be stable for around five years, you might look at an adjustable-rate product that will lock in for a short time period,” Martin says.
But if you expect to be somewhere for the rest of your life, a fixed-rate mortgage makes more sense.
