Here’s where mortgage rates are—the first time hitting 5% since 2011. As an aside, if you have a mortgage, I’m a big fan of paying it off. And it has nothing to do with interest rates or inflation. Sure, you can carry a mortgage and pay it back with cheap dollars over a good part of your lifetime. But, as one bank lender said to me years ago when applying for a mortgage, “We have no problem owning your home. I’ve always liked your neighborhood.”
Remember this: It’s the bank’s home as long as there’s a mortgage. And so, yes, you can put a price on peace of mind. It’s the amount you owe on your mortgage.
The Wall Street Journal reports on rates rising to 5%:
The interest rate on America’s most popular mortgage hit 5% for the first time in more than a decade, extending a sharp rise that has yet to significantly slow the red-hot housing market.
Interest on the average 30-year fixed-rate mortgage climbed from 4.72% a week ago to its highest level since early 2011, government-mortgage company Freddie Mac said Thursday. Fifteen months ago, mortgage rates were at all-time lows.
Rates’ fastest three-month increase since 1987 has made the housing market ground zero for the Federal Reserve’s efforts to tame inflation. Home buyers, already facing surging house prices, are now contending with a substantial increase in financing expenses, further lifting monthly payments.
A year ago, buying the median American home at prevailing rates meant a monthly mortgage bill of about $1,223 after a 20% down payment, according to calculations by George Ratiu, an economist at Realtor.com. At recent rates, such a purchase would require a monthly payment of nearly $1,700—a 38% increase, he estimated.
News Corp, parent of The Wall Street Journal, operates Realtor.com.
Even compared with searing inflation elsewhere in the economy, that counts as extraordinary price growth. It also strikes at the bedrock of many families’ finances, Mr. Ratiu said. “Most Americans who buy a home are in a sense making the biggest purchase of their lives,” he said.
Action Line: There’s nothing like owning your home and living debt-free. I’m speaking from experience. You can do this. Click here, and I’ll stick with you through thick and thin.
E.J. Smith - Your Survival Guy
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