Interest rates on long-term U.S. mortgage loans have been near all-time record lows for a few years now, but they are predicted to start rising during the second half of 2013. That makes now a crucial period for potential and current homeowners to take advantage of the savings to be had from historically rock-bottom rates. Here’s how:
Beef Up Your Credit
Even though rates are uber-low, mortgage lending standards are still sky high. That means decent credit scores are a must. If yours is in need of improvement, start today by making every possible payment on time. Bringing down balances on credit cards can also help as can disputing any errors you find in your credit report. It takes time for all these changes to affect your score, so start now so that you can qualify for good rates before they rise significantly.
Lock in a New, Low Rate
Refinancing is one of the best ways to take advantage of today’s rates. If you can qualify, a refinance loan can save you plenty of money each month in payments and thousands over the course of your loan. You might also opt for a shorter loan term in order to pay down your mortgage at history’s lowest rates. Switching from a 30-year conventional mortgage to a 15-year loan might not change your monthly payment much, but it will have a huge impact on your total interest costs. If you have any desire to refinance your loan, there will never be a better time than now.
Buyers who have been sitting on the fence may soon be kicking themselves for not jumping into the housing market sooner as rates start to rise. There are certainly some markets where inventory is so low that bidding wars are the norm again, but by historical standards prices are still low and the interest rates savings are incredible. It’s time to find a property and take the plunge.
Shop and Compare
And whether buying or refinancing, borrowers should do their homework to find the best rates. This includes getting quotes online as well as make phone calls to lenders. Loan requirements may still be stiff, but lenders are still looking for business and making them compete for your business can help you secure the lowest rate and fees.
The savings are ripe now in the mortgage market for those who can buy or refinance, and improving your credit score and shopping around can make a new mortgage even sweeter.