The biggest credit news this week is all about movement in mortgage rates, as they take a slight dip after a meteoric rise.
If you had any doubt about how much influence the Federal Reserve’s policies have on the economy, this week resolved it. After Chairman Ben Bernanke assured the media that the wind-down of the Fed’s bond buying program would not be as severe as many thought, mortgage rates dropped again.
The average 30-year fixed-rate mortgage hit 4.51% last week, then began to level off this week. Bernanke acknowledged that there are still many Americans who are struggling to get a mortgage, and that the Fed not only understood this but would continue policies to keep credit open.
The meteoric rise in mortgage rates through June may have scared many potential homebuyers into running out and locking in a low rate while they still can, but mortgage rates fell again this week, suggesting a stabilization may be happening.
What does this mean for potential homebuyers? While rates may continue to rise through the end of the year and beyond, you may not need to rush through the process to lock in a rate right now.
Scott Sheldon, a mortgage pro and Credit.com contributor, knows his stuff when it comes to home financing. His latest tip for homebuyers is to consider paying their mortgage insurance upfront, a process called single-pay mortgage insurance.
While mortgage insurance can add thousands to your home payments for the first few years of homeownership, paying it upfront and at once can cut the cost in half. You should be prepared to factor in an extra, major expense into your closing costs, however, if you decide to go with this option.