February 4th, 2018 10:00 AM by Joan Rusco
“(VA) mortgage rates haven’t risen this fast since the 2016 election” says the online publication of Mortgage Reports. For almost the past 7 months we at VALoansMN could get you a loan for under 4% (assuming good credit). It appears predictions of rising rates are coming true.
Many Minnesota, Dakota, Wisconsin vets have been taking advantage of the rates VALoansMN has been able to find for you. As the new year started we were still able to get many of our clients rates under 4%. However, according to major mortgage underwriters those rates are going away. Here’s how Mortgage Reports puts it:
“Freddie Mac reports that the average 30-year fixed rate increased from 3.95% the first week of January to 4.15% toward month-end. It's only the second time in the past year that rates have increased 20 basis points (0.20%) within a 4-week stretch.”
Yet, this may not be the end of increases. Surveying industry predictions we find these prognostications for mortgage rates by the end of this year:
· Mortgage Bankers Association: 4.6%
· Fannie Mae / Freddie Mac: 4.5%
· Realtor.com: 4.6% average, reaching 5% by year-end
· National Association of Realtors: 4.5%
· Kiplinger: 4.4%
· National Association of Home Builders: 4.34%
We must admit, even these higher rates are still historically low. For veterans who are in the 20’s this news may be disheartening but for those of us a bit longer in the tooth VA loan rates in the 4 to 5% rates still sound very good.
More mature veterans (that’s a polite way of saying ‘older’) can remember when buying a house meant taking a mortgage with double digit rates. In the late 1980’s many thought getting a rate as low as 10% was a great deal. We rushed to refinance those mortgages which were 13 to 18%. Let’s take a brief look at what these numbers mean to Minnesota, Dakota, Wisconsin vets.
Buying a $200,000 house using your earned VA loan benefits with a 10% rate would mean a monthly payment of $1,755 a month. If you had the common rate a few years earlier in the mid 1980’s your payment might have been (with a 13% loan) $2,212 a month. Now let’s get back to reality. If the higher rates come to pass as predicted going as high as 5% your payment will be $1,074! Don’t lose this perspective during all the reports of increasing va loan rates. Even if rates hit 5% you are still $700 a month under what rates were when they dropped all the way down to 10% in the late 1980’s.
In the end we at VALoansMN want you to be smart about your home purchase or refinance. Will you save money by using one of our loans today rather than waiting until the end of the year and possible high rates? Sure you will however, buying a home is a very long term commitment so think it through. Give us a call, let us run the numbers for you. It’s what we at VALoansMN do every day servicing our veterans and active duty personnel. We’d love the opportunity to serve you.