Fed interest rate hike: what to do if you’re buying a house
NORTH TEXAS (CBSDFW.COM) – Debt has simply become more expensive for consumers – whether it’s car loans, credit cards and, in some cases, mortgages.
As expected, the Federal Reserve on Wednesday. It’s the latest in a series of aggressive rate hikes as the Fed works to rein in inflation.
For Carlotta Booker, it’s a concern – but rising interest rates can’t extinguish her dreams of home ownership.
“It means we’ll have a permanent place to stay,” Booker says, “A place of our own. A place that I could pass on to my daughter.”
Booker admits being excited “just thinking about it. I can’t wait. You’re a little nervous, though…about rising interest rates.”
And with good reason. The average 30-year fixed mortgage rate is now around 7% – the highest in two decades.
“Silver is more expensive,” says Stephen Patterson, chief financial strategist at Keycity Capital.
It then proceeds with some tedious mortgage calculations – especially for those looking to buy and without much cushion in the budget.
“So a year ago mortgage rates were around 3%,” Patterson said. “A year ago, borrowing $300,000 was about $1,265 a month. Today, that same note at 7% will cost you about $2,000 a month. So an extra $750 a month because of the rising interest rates.”
Patterson’s advice to everyone right now, whether you’re house hunting or not, is to save as much money as possible and avoid using credit cards to deal with rising prices.
“I try not to spend on frivolous things,” Booker says, “and cut back and be careful with the things I put to my credit.”
These are all lessons Booker has learned from taking advantage of the free online homeownership courses Dallas County offers to help buyers prepare.
“How to select a realtor, how to avoid foreclosure…credit repair,” says Christian Grisales of Dallas County. “So we cover a range of issues. That’s why we invite Dallas County residents to participate, get educated, and hopefully own their own homes.”
For those who complete the courses and qualify, there is also $7,500 available in down payment assistance.
“I feel ready,” says Booker. “I know what I have to do and I do it.”
Find more course information here.