Some homebuyers face 'payment shock.' Here are mortgage-saving tips.
By The Exchange Team
Despite indicators of a slowing property market, homebuyers face high prices and interest rates.
Mortgage News Daily reports that the average 30-year fixed-rate mortgage rate is 6.7%, up from 3.3% in 2022.
In addition, according to Realtor.com, property prices — the median is $435,000 — are up 13.1% on average from a year ago.
Consider an Adjustable rate mortgage. ARMs have a lower initial rate than fixed-rate mortgages.
1. An ARM could be a short-term answer
A shorter loan with a better rate may be preferable to a 30-year mortgage. A 15-year loan currently averages 6%.
2. 15-year mortgages reduce interest.
First-time homebuyers with limited means may qualify for federal programs that cut down payments and closing expenses.
3. First-time homebuyer programs can help with costs
Lease- or rent-to-own contracts may make sense. A percentage of the monthly rent is often put into an escrow account until the day of purchase.
4. Sometimes rent-to-own works.