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Rates? How true?

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Caitt
Regular Contributor

Rates? How true?

I just spoke with a lender. He adviced me that in the beginning of the year the rates will be going up due to the Feds? (If I heard correctly)
How true is this? He also stated that my best choice will be FHA loans. He also adviced me that it would not be that much of a difference of my credit score being a 700 to me being a 640. Is he just trying to rush me?
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Anonymous
Not applicable

Re: Rates? How true?

From what I can gather there likely will be a rate increase. This is just reading what economists and talking heads are saying about it. Only Uncle Sam knows for sure if they will or not. That said, if there is it won't be a drastic change. So instead of getting say 4.000% you might have to settle for 4.125% or 4.250% for example. The fed doesn't want to rock the boat too much and scare off consumers from buying homes.  If you look at the big picture this would still be an incredibly low rate historically. I wouldn't rush into anything to try and beat a rate increase (that also may not even happen).

 

When shopping for my mortgage I had a broker try to make this potential rate increase sound like the sky was falling and I needed to lock in RIGHT THIS SECOND! But that is not the case. If you find something that fits your needs before any changes take place, great. If not don't lose too much sleep over it. Hopefully your lender is just making you aware of current situation and not trying to use it as a high pressure sales tactic.

 

 

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Caitt
Regular Contributor

Re: Rates? How true?

what about the credit issue?
Thanks for your input. He actually told me a drastic change.but honestly that is not that drastic.
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Anonymous
Not applicable

Re: Rates? How true?

Here is a good article in NY Times about the potential rate increase:

 

http://www.nytimes.com/interactive/2015/business/economy/fed-interest-rates.html

 

As far as credit scores affecting what rates you get offered, I'm not a good person to answer that. Don't know enough about it as I'm new to this all myself. Hopefully someone can chime in with more help.

 

I can give you my own account of what I was offered based on my changing credit score:

 

Started shopping for loan. Credit was pulled and came back at 700-710. I was offered rates of 4.250-4.625%. I discovered I had a collection on my report I had no idea existed. Took care of collection and it was deleted. Scores jumped up to 800-810 range (I have a pretty thin credit profile and that single collection was only bad mark on my report). With the higher score I was offered rates in 4.000-4.375% range. So that 100pt score difference amounted to about 0.250% difference in rate.

 

Again, not sure if this is any help but I thought I would share.

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