Homebuying doesn't just feel insanely expensive. It really is. Mortgage rates just hit their highest point in 23 years at 7.49%.
That may not seem like much, but it can easily cripple you economically if you're not careful. Mortgages have always been confusing things, especially for young adults buying their first home. How do you understand mortgage rates, and how will that affect your home ownership experience?
Today, we take a look at 2024 mortgage rates in Boston, Massachusetts. We'll discuss all the home-buying tips you should know in regard to mortgage financing.
What Is a Mortgage, Exactly?
Homes often eclipse the hundreds of thousands of dollars, which is money you probably don't have. A mortgage is effectively a huge loan that enables you to purchase real estate. They usually last either 15 or 30 years and have a set payment rate.
Consequences of Nonpayment
Unlike most loans, however, the lender will take back the property if you fail to repay them. This makes your home "collateral," which is a guarantee for the lender. Unless you take out a second mortgage to help pay off the first, your home will go into foreclosure.
What Are Mortgage Rates?
To make it worthwhile (like any loan), the lender will charge interest on the mortgage. Many mortgages are fixed-rate mortgages, meaning that interest rate never changes. There are adjustable-rate mortgages, too, which change later on based on the market.
Which Is Best for You?
For most people, the traditional fixed-rate mortgage is the best choice. This makes it a lot easier to do your property accounting since that rate will never change. Nor will you have to worry about a bad year making your rate skyrocket.
What Affects Mortgage Rates?
The biggest question people usually have is what affects current mortgage trends. Since they are probably going to be buying their first rental property, they need to be able to afford a second. Let's look at a few common factors.
Inflation
Inflation is the most obvious answer. Money loses its value over time, and lenders adjust their rates accordingly.
Economic Upturn
Ironically, it's when the economy is doing really well that mortgage rates also go up. People have more money, and so lenders jack up interest rates. It's when the economy is not doing well that mortgage rates are at their lowest.
Fed Funds Rate
To keep things in check, the Federal Reserve may change its monetary policy. This has a trickle-down effect that impacts loan rates.
Bond and Housing Market
Of course, the market itself will affect loan rates. The yield on bond rates will determine what rate lenders sit their mortgages at. Further, a slower market with fewer sales and reduced supply curtails interest rates.
Learn More with PMI
Mortgage rates will have a huge impact on when you buy a home. Most of them are fixed, and they depend on a wide variety of factors. Depending on how the market's faring and what the Fed/Treasury is doing, rates could go up or down.
PMI of Greater Boston services the Boston, Massachusetts area with pride. Our years of experience dealing with mortgages and new homebuyers make us uniquely equipped to help you. And if you've already got a home to rent, get a free rental analysis.
