Facts About Rising Interest Rates
With interest rates rising and the 30-year mortgage rate hovering near 4.35-percent, up from a low of 3.3-percent, many sellers and homebuyers are finding it overwhelmingly difficult to navigate today’s loan waters. Highlighted below are helpful consumer loan tips:
- Refinances – The refinance window is rapidly beginning to close. Homeowners that were turned down for refinances several years ago, may want to consider reapplying, as many homes have increased in value. Additionally, many lenders have begun to relax their strict loan standards.
- Loans – Interest rates are still at record lows and mortgages are relatively inexpensive. Experts predict that by 2014, interest rates will be around 4.7-percent, hopefully not breaking the 6-percent value mark until 2017.
- Recovery – Slowly increasing interest rates are not expected to hinder the real estate housing recovery. While it may slightly dampen portions of the recovery, it will only be temporary. For the housing market to be utterly devastated by the increasing loan rates, the rates would have to jump nearly three-percentage points within a short time period. Fortunately, experts do not anticipate this occurring.
- Fixed Loans vs. ARMs – No one is saying that Adjustable Rate Mortgages (ARMs) are bad, but if someone plans on staying in their home for several years, it is important to consider what the refinance rate will be once the ARM matures. An excellent alternative for homeowners looking to hold onto real estate investments for longer periods of time includes selecting a fixed-rate mortgage. ARMs are only viable alternatives if a homeowner knows for a fact that he/she will not be keeping the residence for more than a few years.
- Lock In – When purchasing a new loan, with interest rates on the rise, it is highly recommended that borrowers lock in rates for a 45- or 60-day period. If purchasing new construction, always anticipate some delays, which means it may be worthwhile to purchase an extended lock for 90 or 120 days. These locks essentially lock in lower rates.
Loans are still proving to be a challenge for real estate investors. Many lenders still have rigid guidelines that pertain to investment loans. This is largely due in part to the slow U.S. economic recovery and lenders still feeling on edge about the real estate bubble burst of 2006. Fortunately, there are a number of alternative loan options available for real estate investors.
My Hard Money Lenders offers a compilation of hard money lenders by state. Easy to search, this website categorizes direct lenders that offer the following types of loans: apartment building loans, commercial building loans, apartment complexes, triplexes, residential building projects, retail land development, mobile home parks, retail centers, residential and commercial mixed use properties, raw land development, golf courses, gold mines and even special conversion properties.
For real estate investors that are looking to jump back into the real estate market, Better Than Loans offers detailed information about today’s current investment funding options.