The year 2016 will be an interesting time for homebuyers looking to invest in a new home in the state of Pennsylvania. Finding the right home in the Commonwealth will involve more than just locating the ideal neighborhoods with amenities, low crime rates and great schools. It will also require finding the best mortgage rates to finance the new home.
Nationwide, interest rates ranged around the national average of 2.95% for a 15-year fixed rate mortgage and 3.65% for 30-year fixed rate mortgage as weekly averages in February 2016. Yet the basis points aren’t expected to stay low forever based on the Federal Reserve’s plans of raising the benchmark rate for the next few years.
What is the Current State of Pennsylvania Mortgage Rates?
Pennsylvania mortgage rates are in a state of flux this early in the year. Bank rates are still lower than the national average for both 15-year fixed and 30-year fixed mortgages, which are the most common choices for homebuyers. As of February 18, 2016, a 15-year fixed mortgage rate was 2.79% as a 30-year fixed rate mortgage was 3.52%, according to  Bankrate. Throughout the month, the basis points have been on the rise as much as 0.06%. Yet even with this sudden upward trend, the rates are still low enough for home buyers to jump on at this early stage before the many changes that will be happening to the banking industry during the remainder of the year.
What Will Be Happening with Rates For the Rest of 2016?
The Federal Reserve had made an announcement in December 2015 that they would be raising the benchmark for mortgage rates for 2016 and 2017. While the Federal Reserve immediately began increasing short-term interest rates, the long-term rates are still at all-time lows. In fact, the common 30-year fixed home mortgage rate has instead dropped 36 basis points leading into February 2016. Most economists are keeping a close eye on the financial market and investors who are pouring money into Treasury bonds recently due to rumors of oil production limitations. Since mortgage rates are tied into the 10-year Treasury, this situation has led to mortgage rates being so low and affordable for homebuyers.
Yet the market is always fluctuating. Early predictions by economists are that mortgage rates will increase by one percentage point a year for the next several years. While inflation could change these predictions and cause the Federal Reserve to increase mortgage rates at a faster pace, this situation doesn’t seem the case for now.
What Should Homebuyers Do About Pennsylvania Mortgage Rates?
Now is the perfect time for homebuyers to send in mortgage applications. Even people looking to simply refinance their existing mortgages are taking advantage of the current low rates to save more money on their loans. So people are locking in these low rates now so they can enjoy the savings and have more money in their bank accounts. Even if mortgage rates do begin to rise, they will still be considered lower than the rates that were present back in 2014 and 2015.
One of the common misconceptions that potential homebuyers may have is that mortgage rates are affected by the seasons and when people are going out to look at homes. Some people believe that mortgage rates take a nosedive in the fall, winter and early spring because the home-buying market slows down during the holidays and the winter weather. Yet the fact is that the seasons will have no effect on Pennsylvania mortgage rates. So if you are a buyer who is holding off on purchasing a home, you may find that mortgage rates have increased during the latter part of 2016 and you will be paying more for your loan. It is best to look for a home when you are financial stable and get your current mortgage rates locked in now before the market fluctuates in an upward trend.
What Buyers Should do Before Hitting the Neighborhood Streets
Before searching for a home, a buyer should research Pennsylvania banks in their area and start the application process for a mortgage loan. While you may be unsure of how much you plan to eventually pay for your dream home, getting pre-approval allows you to know how much money the bank will let you borrow. This advantage will allow you to better budget your finances so you can take into the account additional expenses that homeownership will bring, such as purchasing insurance, paying utilities, and other costs.
Also keep in mind that pre-approval is not the same as being pre-qualified. When you are pre-qualified, you have passed by the first steps of applying for a mortgage without the lender taking a more comprehensive look at the information on your application. Things can change instantly as, during a thorough examination, the mortgage company decides to lower the amount that you can borrow or even deny the mortgage loan. With pre-approval, you know the mortgage company has done their research and will give you the stated amount.
Preapproval also gives you an advantage when placing a bid for homes. If there are other buyers who are interested in the same house but do not have pre-approval letter from their mortgage lenders, the seller may take your bid more seriously and seek the closing faster because they know you are ready to move forward with the home-buying process.
Research Banks to Get the Best Mortgage
Not all Pennsylvania banks will offer the same mortgage rates. Perform your research early, compare banks, and find the right rates that fit into your current financial state. Also, once you do find a home, you should still monitor interest rates in case you can refinance in the future for a lower rate.
2 Point Highlight
Bank rates are still lower than the national average for both 15-year fixed and 30-year fixed mortgages, which are the most common choices for home buyers.
Even people looking to simply refinance their existing mortgages are taking advantage of the current low rates to save more money on their loans.
