Are Changes Going To Affect Your Family?

When mortgage interest rates are climbing, do you know how these changes will impact your family? Whether you have an adjustable-rate mortgage or a fixed-rate loan, changing interest rates may affect your monthly budget.

Home mortgage expenses are generally a large part of any family’s monthly budget. When mortgage rates are rising, many people are caught off guard and surprised by an increase in their monthly housing expenses. How can you protect your family’s budget against the uncertainty of rising mortgage rates?

Rates are edging up

Many analysts are predicting that mortgage rates will rise steadily during 2014, citing the Federal Reserve Bank’s plan to wind down stimulus activity as a major reason for the predicted increase. Higher fees for low-income home buyers are in the works, and a more stringent screening process for Fannie Mae and Freddie Mac loans means that fewer people will qualify for these lower-rate loans. Approximately two-thirds of home loans come through these two agencies. “It is generally held in the financial press that interest rates — and thus mortgage rates — are on the rise,” says Bennie D. Waller, Ph.D., professor of finance and real estate at Longwood University. “For example, we refinanced in June into a 15-year fixed-rate mortgage for 2.65 percent. A similar refinance now entails a rate closer to 4 percent today.”

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