Should You Settle or Wait to Purchase

With mortgage rates and home prices on the rise, you may be asking yourself whether or not you should just settle for purchasing whatever home is available or wait a little longer and risk paying more. Well, it depends on where you are actually purchasing a home. Home prices are expected to rise this year; however, interest rates are not expected to get much higher. Freddie Mac’s weekly survey states the national average for a 30 year-fixed-rate was at 3.52%, up from last Thursday’s 3.51% and the average rate for a 5/1 ARM was 2.63%, up from 2.61%. However, the mortgage rate a 30 year-fixed-rate is not anticipated to raise much above the 4% mark this year, given the Federal Reserve’s effort to keep the low rates. Those hoping to refinance are going to be affected more by these smaller increases, and it is predicted that by the end of the year, refinancing will shrink to only 40% of total mortgages. This will be down from the represented 75% in 2012. Right now, buyers are in a strong position to have down payments and get financing, with the rising rates improving the economy. If your area has a shortage of homes on the market, you will have to face the question of whether or not to settle, but with the rates not expected to go too much higher, you might not have to pay a ton more.