If you are looking to buy a home in Wisconsin mortgage costs are slowly eking their way back upward, after over four years of hovering near zero.
The Federal Reserve has kept mortgage rates low in order to spur interest in home purchases for those who qualify, as well as to make credit easier to obtain throughout the economy, for the purpose of encouraging growth.
However, now that unemployment is back below 8 percent, the Fed is poised to allow rates to come up in 2014, and it is also going to stop purchasing as many bonds in the distressed mortgage industry, a program that has brought $85 billion of mortgage-backed bonds into the Treasury each month, even though many of those securities are almost worthless because of the status of the mortgages attached.
As of December 10, 2013, Wisconsin mortgage interest rates for a 30-year fixed rate loan sat at 4.
26 percent, up from 4.
25 percent the previous Tuesday.
However, on December 4, the rate had jumped up to 4.
33 percent and stayed right around there until dropping back on the morning of the 10th.
Strong job reports continue to hit the news, meaning that the economy is growing.
While this is good news for business owners and people who already own homes, because their values will continue to go up, it is not that great for the person looking to buy a home, particularly if you are several months away from having the down payment in hand or having the credit scores that you need to quality for funding.
If you are looking for a Wisconsin mortgage with a 15-year term, the fixed rate available right now is 3.
21 percent.
In the market for a 5-1 adjustable-rate (ARM) mortgage? That rate is 2.
76 percent.
Why are the rates different? 15-year loans always have a rate that is lower than 30-year rates, because the lender gets its money back sooner.
Your payments are going to be higher, although not as much as you might think.
The cost of interest is fairly high.
Consider the purchase of a home for $200,000.
You make a down payment of $50,000, meaning that the loan is $150,000.
Even with a 5 percent interest rate, your payment for a 30-year loan is $805.
23 each month.
If you asked for a 15-year note instead of a 30-year loan, your payment would go up to $1,186.
19.
You would pay about $140,000 in interest for the 30-year note and about $64,000 in interest for the 15-year note.
So that's something to consider.
What about the adjustable-rate mortgage? If you lock it in now, the lender can adjust the rate upward once over the next five years.
Usually there is a cap (generally 8 percent) to the amount that the lender can increase your percentage.
If you think that you'll be able to pay the house off over the next five years, or at least take a significant chunk out of the principal, it might be worth making your Wisconsin mortgage an ARM, and then getting a refinancing loan after the five-year term ends.
Talk to your financial adviser to determine the best course for your own lending needs.
Your house is your biggest investment, so make sure you do it the right way.
The Federal Reserve has kept mortgage rates low in order to spur interest in home purchases for those who qualify, as well as to make credit easier to obtain throughout the economy, for the purpose of encouraging growth.
However, now that unemployment is back below 8 percent, the Fed is poised to allow rates to come up in 2014, and it is also going to stop purchasing as many bonds in the distressed mortgage industry, a program that has brought $85 billion of mortgage-backed bonds into the Treasury each month, even though many of those securities are almost worthless because of the status of the mortgages attached.
As of December 10, 2013, Wisconsin mortgage interest rates for a 30-year fixed rate loan sat at 4.
26 percent, up from 4.
25 percent the previous Tuesday.
However, on December 4, the rate had jumped up to 4.
33 percent and stayed right around there until dropping back on the morning of the 10th.
Strong job reports continue to hit the news, meaning that the economy is growing.
While this is good news for business owners and people who already own homes, because their values will continue to go up, it is not that great for the person looking to buy a home, particularly if you are several months away from having the down payment in hand or having the credit scores that you need to quality for funding.
If you are looking for a Wisconsin mortgage with a 15-year term, the fixed rate available right now is 3.
21 percent.
In the market for a 5-1 adjustable-rate (ARM) mortgage? That rate is 2.
76 percent.
Why are the rates different? 15-year loans always have a rate that is lower than 30-year rates, because the lender gets its money back sooner.
Your payments are going to be higher, although not as much as you might think.
The cost of interest is fairly high.
Consider the purchase of a home for $200,000.
You make a down payment of $50,000, meaning that the loan is $150,000.
Even with a 5 percent interest rate, your payment for a 30-year loan is $805.
23 each month.
If you asked for a 15-year note instead of a 30-year loan, your payment would go up to $1,186.
19.
You would pay about $140,000 in interest for the 30-year note and about $64,000 in interest for the 15-year note.
So that's something to consider.
What about the adjustable-rate mortgage? If you lock it in now, the lender can adjust the rate upward once over the next five years.
Usually there is a cap (generally 8 percent) to the amount that the lender can increase your percentage.
If you think that you'll be able to pay the house off over the next five years, or at least take a significant chunk out of the principal, it might be worth making your Wisconsin mortgage an ARM, and then getting a refinancing loan after the five-year term ends.
Talk to your financial adviser to determine the best course for your own lending needs.
Your house is your biggest investment, so make sure you do it the right way.
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