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Nov 17, 201510:55 AMOpen Mic

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Evaluate mortgage options before rates rise

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While economists across the nation debate whether the Federal Reserve will raise interest rates this year or wait until 2016, many homebuyers are taking advantage of a brisk housing market to purchase homes now and lock in a mortgage rate at levels that remain historically low. Although the Fed does not directly control mortgage rates, the rate it sets for banks’ own borrowing tends to quickly affect the mortgage rates banks offer to customers.

Generally, mortgage rates in the U.S. are under 4% for 30-year fixed loans, and less than 3% for 15-year fixed, depending on the amount of your down payment, and with a good credit score.

For buyers, the combination of low rates and the fall season, which is usually slower than spring or summer, may be an ideal scenario. Home sales in Wisconsin remain strong overall, with an increase of 11.1% in September, compared to sales in September 2014, according to the Wisconsin REALTORS Association (WRA). The report also noted that sales were robust in every region of the state and are on pace to reach the highest annual volume since 2005.

If you are in the housing market, it’s important to know your financing options and to be prepared to act quickly when you find that perfect home.

Determine how much you can afford — Talk to mortgage lenders to help you decide how much you can borrow and how much you should spend for a home. They are not necessarily the same. For example, just because a lender will give you a loan of $250,000 doesn’t mean you should borrow the full amount. You should consider the cost of the mortgage along with your other monthly expenses and your overall financial goals, a point especially important for first-time homebuyers.

Develop a relationship with a lender — Online loans might appear to be a simple choice but the mortgage process is complicated. Working with a local lender can not only streamline the process but also might pay off with such added benefits as a better rate on your savings account or help with your overall financial planning.


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