February 1st, 2019 3:02 PM by Joan Rusco
“Mortgage rates are set to increase” said the experts as they gazed into the crystal balls about a year ago. We confess, we too thought we may see somewhat of a dramatic increase. We, and they, were wrong.
The CEO of the American College of Financial Services opined mortgage rates were likely to increase a “notch or two”. Exactly what a “notch” is was unexplained. I would assume it would mean a full percentage point. That hasn’t happened. Others were more subdued in their estimates and were closer to being correct.
No one, and we mean NO ONE can accurately predict where rates are headed. We all use our best guesstimates or, as those in the know prefer to say, our educated guess to place rates either up or down. We encourage veterans to consult with financial advisors or tax experts and make decisions on what works best for you. The mortgage rate, while important to some degree, should not be the only determining factor when considering a home loan.
We have, on several occasions, talked about the benefits of using your earned VA loan to buy or refinance a home. Not only are rates sometimes lower on VA loans but you can buy a home with zero dollars down. The VA will guarantee the full purchase price of your home. Lenders like that guarantee because it reduces the risk to the lender without pushing up the rates available to you. Another very positive aspect of using your VA mortgage is it is an assumable loan. If you decide to sell your home another qualified veteran can assume the balance of your loan. We’ve detailed that in earlier posts and won’t repeat the significance of that benefit here but if you want details call Brad at VALoansMN 612-240-9922.
So how wrong were the experts who made predictions of rising rates? A year ago the average mortgage rate was about 4.25%. Today that rate is just under 4.5%. Given recent comments by the Federal Reserve’s Open Market Committee they do not expect interest rates to make any dramatic moves upward in coming months.
Come back in a year and we’ll tell you how right (or wrong) we’ve been. Remember, no one can predict where rates are going!