Selasa, 14 Januari 2014

Understanding Wisconsin Mortgage Rates


If you are in the market for a new home, Wisconsin mortgage rates, which have been hanging around near the 3 percent rate for several years now, are headed back upward. The reason has to do with the progress in the American economy over the past couple of years. One area of concern has been the jobs market, as unemployment went well over 10 percent during the worst parts of the recession that began in 2014. However, with the job reports improving each month, that rate has now dipped just below 8 percent. Also, home prices had plummeted in recent years, because of the high number of foreclosure filings out there. In the past 12 months, Wisconsin home prices have gone up an average of 14 percent, indicating that values are returning to more palatable levels.

As a result, the Federal Reserve appears to be ready to allow interest rates to start rising again. There are many reports indicating that the Fed will increase its prime rate, and other rates are likely to follow suit. The most recent Wisconsin mortgage rates for a 30-year loan with fixed rates is 4.26 percent. This is down from a recent high of 4.33 percent a week ago, but it still represents an increase from rates a couple of months ago. As rosy job reports keep arriving in the economic news pages, interest rates are likely to go up even further. If you are a lender or someone who already owns a home, this is great news, because it means that demand for your home will increase, making values go up. Also, having fewer foreclosures taking place in your neighborhood will help keep your comparable transaction reports higher, leading to higher home values over time. If you are still looking for a home, and your credit scores and available savings for a down payment aren't quite ready to purchase a home yet, you face the prospect of interest rates climbing significantly higher before you get your loan terms set.

Wisconsin mortgage rates are lower with a 15-year loan instead of a 30-year loan. The fixed rate that you can get right now is 3.21 percent. If you are open to a 5/1 ARM (adjustable-rate mortgage), you can get an even better rate at 2.76 percent. If you're wondering why the rates are different, it has to do with the risk and reward available to the lender. A 30-year loan ties up the lender's money for a long time, so the interest is higher than it would be with a 15-year note. You might think that a 15-year note is going to be a lot more expensive per month, but that isn't always true. Let's say you want to buy a $191,000 home, and you have saved $41,000 to put as a down payment. You're going to be borrowing $150,000. If you borrow that over 30 years at 5 percent, your payment is $805.23 each month. If you took out a 15-year note at 4 percent interest (remember that these loans have lower rates), then you're looking at a payment of $1,109.53 each month. That's about 40 percent more than the payments on the 30-year note, but you only have to make 180 of them, instead of 360. You end up paying just under $50,000 in interest instead of about $140,000 for the 30-year note. So a 15-year note is definitely worth taking a look at.

And what about the adjustable-rate mortgage? Wisconsin mortgage rates right now make this something to look at as well. If you think that you can pay for your house outright within five years, then locking in that 2.76 percent rate makes sense. The lender can adjust the rate one time during the loan, but you will still save money if you plan to knock out your principal amount that quickly. Even if you aren't going to pay for the entire house, if you can knock out a significant percentage of your principal, then lock that in and then refinance in five years. Remember that your home is one of the largest investments you will make, so do it wisely.

Douglas Lenski is a 14 year veteran of the mortgage industry and the current President of Wholesale Mortgage Services of Wisconsin. He has trained 20 loan officers and 8 mortgage loan processors. He is considered an expert in the mortgage industry by his peers. He has written many blogs on Mortgage rates particularly Wisconsin Mortgage rates and many more.
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