Mortgage Rates Hit Decade High
According to Freddie Mac data, mortgage rates just hit a decade-high and the average rate for a 30-year fixed mortgage was 5.11 percent in the week ending April. This is the first time that a mortgage index has increased beyond 5% since February 2011. Even though the Fed doesn’t set mortgage rates, it impacts them with its monetary policies. Today’s rates are higher than in 2020 and 2021, although they are still within typical limits when compared to previous years.
“While springtime is typically the busiest home-buying season, the upswing in rates has caused some volatility in demand,” Sam Khater, chief economist at Freddie Mac, said. “It continues to be a seller’s market, but buyers who remain interested in purchasing a home may find that competition has moderately softened.”
How first-time buyers and homeowners can get help
First-time homebuyers and homeowners get assistance from various programs if they meet the eligibility requirements. For example, the Homeowner Assistance Fund (HAF) is a $9.961billion federal program that helps struggling households behind on their mortgages along with other housing-related expenses. Check if the HAF program is still available in your state and apply for assistance. States like California offer $80,000.00 per household. You can use these funds to prevent foreclosures, mortgage delinquencies and defaults, loss of utilities or other services, and displacement of homeowners experiencing financial burdens after January 21, 2020.
If you can’t afford a 20% down payment on a house, a lender will almost always demand you take out a Private Mortgage Insurance (PMI). You may be forced to purchase private mortgage insurance (PMI) as a condition of obtaining a traditional mortgage loan. When a borrower makes a down payment of less than 20% of the property’s value, the mortgage’s loan-to-value (LTV) ratio is over 80% (the higher the LTV ratio, the higher the risk profile of the mortgage for the lender). PMI costs can range from 0.25% to 2% of your loan balance per year, depending on the size of the down payment and mortgage, the loan term, and the borrower’s credit score, according to Investopedia.