Current news headlines about rising mortgage rates and low inventory may cause home buyers to wonder if it is financially smarter to buy or rent in today's real estate market. The answer is clearly BUY. A recent report from Trulia, a San Francisco, California-based real estate resource, calculated that it is 35% cheaper to buy a home than it is to rent one. "While it's hard to believe after the recent spike in mortgage rates, it's still more than one-third cheaper to buy a home than to rent," says Jed Kolko, chief economist of Trulia.
The continuing buying advantage, in the face of rising home prices and mortgage rates, is due to the historically low levels of both indexes for the past year. The recent mortgage rate change of a 30-year fixed-rate loan from 3.75% to 4.8% still puts the mortgage rate below its long-term historical norm. Until that rate rises above 5.5%, it will remain more affordable to purchase a home in almost even market in the country including Wellesley.
Active home buyers will want to secure an interest rate before it climbs any higher. The best way to do that is to decide on a mortgage type and lock in a mortgage rate. A rate lock (sometimes called a rate commitment) is a legally binding agreement that you will get a specified rate. It's an effective strategy for securing a mortgage rate between the time you get a mortgage quote and the time when you enter into an agreement on a house. Make sure that your rate lock is long enough is cover the time it takes to enter into an agreement with a seller and to settle your loan.
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Rutledge Properties has dependable, timely referral for all the trades. Contact us if you need names of mortgage resources to help you pick a mortgage option and get a rate lock.