16 Cities Where it’s Cheaper to Buy than it is to Rent

chicago

January is a natural time to take stock of your financial life, and to dream big dreams about 2018. Could this be the year you make the leap to homeownership? Or will you make a big change and trade in your mortgage payment for a landlord? While the housing market has slowly recovered from its dip in the 2000s, blind faith in housing gains has not. Home ownership rates hit a 50-year low in 2015, and first-time home buyers are now waiting a record six years to move from renting to buying. In fact, young adults looking to upgrade out of their one-bedroom apartments are increasingly renting single-family homes rather than buying. Single-family rentals — either detached homes or townhomes — make up the fastest-growing segment of the housing market, according to the Urban Institute.

In the complex calculus that’s required for the renting vs. buying decision, one variable stands out: Which is cheaper? If that seems like a tough question to answer, there’s a good reason: crunch the data from America’s largest cities, and you’ll learn it’s a perfectly split decision. Home buying is a better option for those who plan to stay in one place for 3-5 years or more. It’s also a good investment in many housing markets. According to an Urban Institute analysis, among 33 top metropolitan areas in the U.S., there are 16 where buying is cheaper.

  1. Miami

    While it’s cheaper to buy than rent there, it would be a stretch to call the Miami housing market a bargain. A median-priced home still consumes 32 percent of a median earner income, above the recommended 30 percent.

  2. Detroit

    Not long ago, it was possible to buy a home in Detroit for well below the median home price in the U.S. The Detroit area has seen some revitalization in recent years, however, and while housing prices have gone up, it’s still a better value to buy a home there than it is to rent one.

  3. Chicago

    Rent in Chicago is on the rise faster than home prices. While they may level out in the near future, it’s a good time to buy while you still can.

  4. Philadelphia

    Renting is significantly more expensive than buying in the City of Brotherly Love. In fact, the average wage-earner would need a 36 percent raise to afford the average rent there. Buying, however, is more affordable.

  5. Tampa, Florida

    For roughly 90 percent of Tampa communities, renting is more expensive than buying.

  6. Pittsburgh

    The average rent in Pittsburgh is $1250 per month, whereas the average home price is just over $145,000. Broken down, it’s cheaper to buy in Pittsburgh, as your monthly mortgage will be much less expensive than the average rent.

  7. Cleveland

    In this popular college town, a homebuyer will save an average of $200 a month if they pay a mortgage instead of rent.

  8. Cincinnati

    Historically speaking, it’s been cheaper to rent than buy in Cincinnati based on the percentage of a person’s income that went to housing costs. That number is now lower for buyers and higher for renters.

  9. Orlando

    In the home of Disneyworld, the average monthly rent will will cost you roughly double what the average comparable monthly mortgage payment will.

  10. Houston

    Even though median rents are falling in Houston, it’s still cheaper to buy, especially if you plan on staying in your home for three years or more.

  11. San Antonio

    Average monthly rent for an apartment in San Antonio will run you $1,226 (estimated as recently as December 2017). The price of a home in the area is $232,000. While the housing market is trending upward, it’s still more advantageous to buy a home, especially if you plan to stay in the area for a long period of time.

  12. New York

    It’s no secret that home prices in the New York City area (including Newark and Jersey City) are well above the national average. However, rental prices are even higher, so if you can afford to buy property here, you’d be better off doing so rather than renting.

  13. Minneapolis/St. Paul

    The Twin Cities are becoming an increasingly popular to destination for young families to move, so it’s a good time to invest in property here instead of renting it.

  14. Kansas City, MO/KS

    Both rents and housing prices are low in the Kansas City area (average rent will cost just under a thousand dollars, while the average home price is $126,100), but buying is better long-term, as it offers more benefits, including potential tax write-offs.

  15. Columbus, Ohio

    Many market experts consider Columbus a “no-brainer” metro area as far as buying over renting. With affordable housing on both sides, the advantage goes to buying.

  16. Boston

    While a buyer may need a large income (or two above-average incomes) to buy here, they’ll need a slightly larger one to rent long-term.

If you’re looking to rent or by and are concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

 

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7 Tips for Deciding How Much Car You Can Afford

HowMuchCar

According to the most recent State of the Automotive Finance Market study from Experian, the average new car loan surged to a shocking $30,534 during the first quarter of the year. Unfortunately, those purchasing new cars didn’t lower their expenses that much. The study noted that the average used car from a franchise set consumers back $20,904, whereas the price of the average used car purchased independently climbed to $16,612.

But what’s really astounding is how long people promised to pay their loans back. New car loans—for both new and used vehicles—lasted an average of almost 69 months, the report noted. Obviously, this is a lot of cash, and there are borrowers who can’t truly afford these loans.

If you’re getting ready to purchase a car and don’t want to overspend or borrow too much, here are seven tips that can help.

#1: Review Your Budget

Whether you plan to finance your car or pay entirely in cash, you need to make sure you understand the financial implications of the purchase. Figure out how the monthly payment will affect your monthly budget or how paying in cash might affect your finances over all.

If you’ve been paying a $400 or $500 monthly car payment all along, you might already know what you can handle. But if you’re financing a car for the first time, you’ll want to sit down and write out a budget and your expenses to gauge how much you can truly afford without forsaking your other financial goals.

If you’re paying for a car in cash, make sure you’re not depleting your emergency fund—and that you’re leaving enough money behind for your regular bills and living expenses.

#2: Consider the Interest Rate

While the total cost of your new or used car is a good place to start your comparison, you should also check to see what interest rate you qualify for. Generally speaking, the interest rate you qualify for will depend on the quality of your credit score. (You can view your free credit report at Credit.com to get a sense of how your credit score may affect your rates.)

And if you think it doesn’t matter, think again. Even a few percentage points can make a huge difference. If you borrow $25,000 at 8% APR, for example, you’ll pay $506.91 per month and incur a total loan cost of $30,414.59. If you take out the same loan but qualify for 4% APR, on the other hand, you’ll pay $460.41 per month and only $27,624.78 over the life of your loan.

#3: Don’t Forget about the Length of Your Loan

While it’s important to gauge the affordability of your new car’s payment and the interest rate you qualify for, don’t forget about the length of your loan. Taking out a longer loan can help you qualify for a lower payment, but you may pay a lot more interest due to the longer stretch of time it takes you to repay.

And if you need to borrow for longer than you really want, it might be worth asking yourself if you’re spending too much.

“If you must borrow money for a car, make sure it is an amount that can be paid off in three to four years and the payment will comfortably fit within your monthly budget,” says financial planner Matt Adams of Money Methods. “If you need to finance a vehicle for anything longer than four years to simply get the payment within reach, you are likely buying more vehicle than you should.”

#4: Remember the Higher Ongoing Costs of New Vehicles

In addition to the sticker price of vehicles you’re considering, it’s smart to look into other costs you might incur, says financial adviser Ryan Cravitz of Milestone Wealth Management.

“Make sure that you don’t forget to account for the many so-called hidden costs when buying a particular car,” he says. “Factors such as the cost of insuring the vehicle, the average maintenance and repair costs, the fuel economy ratings, and whether you should buy the extended warranty are just a few things that should not be ignored.”

Also, don’t forget that a lot of these costs can be higher if you purchase a new car right off the lot. Auto insurance rates in particular tend to be heftier than you might expect when you purchase a newer, more expensive vehicle.

#5: Ask Yourself about the Trade-Offs

Taking on a new car loan is often one of the easiest ways to get into the car you want. While it’s difficult and time-consuming to save up tens of thousands of dollars in a new car fund, you can visit a dealership, finance a car, and drive off the lot in a matter of hours.

Unfortunately, you’ll likely pay a pretty penny for the privilege. While you may theoretically be able to afford the payments on your new car, something usually has to give. And that something might be an expense you miss being able to afford like you were back in the days you didn’t have a huge car payment hanging over your head.

“Remember that whatever you spend on your car, that’s money you won’t have for clothes, food, or going out with your friends,” says financial adviser Anthony Montenegro of Blackmont Financial Advisors. “So, weigh out the trade-off carefully and spend wisely.”

#6: Set a Firm Limit and Consider Your Options

While any of the tips above can help you figure out how much you can afford to spend on your new ride, some financial advisers suggest simplifying the process with a firm limit.

For example, New York financial adviser Joseph Carbone of Focus Planning Group recommends that his clients never take out a car loan that exceeds 10% of their monthly income. “Of course, everyone’s situation is different,” he says. But this situation can truly work if you let it.

Let’s say your take-home pay is $4,500 per month. Using this rule, your car payment should come in under $450 per month. That may not be enough to get you into the car you want, but it’s enough to get you into the car you need.

Financial adviser Brian Hanks also suggests considering more than one car as you make your final selection.

“After you choose a model car you think you want, pick your second favorite,” says Hanks. “Compare the monthly costs of your first and second choice cars side by side. Without a tangible second choice to compare against, it’s too easy to justify higher monthly costs for your first choice.”

#7: Spend Less Than You Can Afford

If you’re still struggling to decide how much to spend—or you’re worried about overextending yourself—take a step back. Unless you need a new car today, there’s nothing wrong with thinking through your decision for weeks or months until you know exactly where you’re at.

And if you still can’t decide, try to err on the side of spending less than you can afford, says financial planner Mitchell Bloom of Bloom Financial, LLC. Bloom says he sees a lot of people who under-budget for and overspend on cars to the point where it puts them in financial peril. Fortunately, this situation is completely avoidable if you do some legwork.

The bottom line: Keep your expenses low, save as much as you can, and have a long-term plan. And if this advice doesn’t mesh with the car you want to buy, you’re probably spending too much.

 

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10 Tips to Secure the Best Interest Rate on your Mortgage

guarantee-a-mortgage

The process of buying a home is a very involved one, and can be daunting, especially for first-time buyers. It’s often a whirlwind of paperwork, credit reports, and scrambling to tie up loose ends.

One of the biggest factors that goes into calculating your monthly mortgage payment (other than the size of the loan itself) is your interest rate. Some of this is determined by the Federal Reserve, but it is mostly determined by you and where you stand financially, and many factors are considered. Here are ten tips on securing the best interest rate on your new mortgage.

Choose between a fixed or adjustable rate mortgage

While many people might be wary of an adjustable rate mortgage (ARM), it can be a better option for those who plan to pay off their mortgage in a short amount of time. For the introductory period of an ARM loan, the interest rate will be lower than that of a fixed rate mortgage. Just make sure you’re prepared to see an increase in your monthly mortgage payment after the introductory period is over.

Make the biggest possible down payment

The larger your down payment, the less money the lender will have to give you, and the lower your interest rate can be. Your interest rate is partially based on your home’s loan-to-value (LTV). For example, if a home is worth $200,000, and the loan is for $199,000, that would be considered a high LTV and is more risky for a lender. If this ratio is lower, however, you might be rewarded with a lower interest rate.

Make sure your credit is in excellent shape

While there is no one credit score needed to buy a house, those with higher credit scores have usually demonstrated good financial competency, and those are the types of consumers to whom lenders can offer lower interest rates.

Pay for points 

It it possible to pay extra directly to your lender in order to lower your interest rate. For every one percent of your loan amount you are willing to pay extra, it could amount to as much as half a percent off your interest rate. Essentially, you are just paying a larger amount of interest up-front.

Have a long employment history

Even if you haven’t been at the same job for several decades, demonstrating that you have no (or minimal) periods of unemployment shows lenders they can count on you to pay your mortgage in full every month. This can help lower your interest rate.

Prove income stability

If you can prove that your line of work is in high demand with no sign of slowing down, or if you work for a large, profitable company, your lender may take this into account when processing your paperwork. Income stability will help show that you won’t be likely to miss any mortgage payments.

Lower your debt-to-income ratio

Even with a high credit score, it’s possible to accumulate a lot of debt. Lenders don’t want you using more than roughly 40 percent of your monthly income on your mortgage, car payments, and credit card bills. The lower your debt-to-income ratio, the lower your interest rate will be.

Build up cash reserves

Most people know they should have enough savings to cover about six months worth of bills. Proving to your lender that you can still pay your mortgage in the event of a job loss will help you score a lower interest rate.

Shop around

Different lenders have different criteria for their loans. Finding the one that suits you best can help ensure you get the best possible interest rate for your financial situation.

Close on your loan as quickly as possible

Some buyers need 30 days to close; others might need as much as 60 days. If you can close within the initial 30 day window, however, you might pay as much as a half a percent point less than those who need 60 days to close.

 

Image: iStock

The post 10 Tips to Secure the Best Interest Rate on your Mortgage appeared first on Credit.com.

10 Tips to Secure the Best Interest Rate on your Mortgage

guarantee-a-mortgage

The process of buying a home is a very involved one, and can be daunting, especially for first-time buyers. It’s often a whirlwind of paperwork, credit reports, and scrambling to tie up loose ends.

One of the biggest factors that goes into calculating your monthly mortgage payment (other than the size of the loan itself) is your interest rate. Some of this is determined by the Federal Reserve, but it is mostly determined by you and where you stand financially, and many factors are considered. Here are ten tips on securing the best interest rate on your new mortgage.

Choose between a fixed or adjustable rate mortgage

While many people might be wary of an adjustable rate mortgage (ARM), it can be a better option for those who plan to pay off their mortgage in a short amount of time. For the introductory period of an ARM loan, the interest rate will be lower than that of a fixed rate mortgage. Just make sure you’re prepared to see an increase in your monthly mortgage payment after the introductory period is over.

Make the biggest possible down payment

The larger your down payment, the less money the lender will have to give you, and the lower your interest rate can be. Your interest rate is partially based on your home’s loan-to-value (LTV). For example, if a home is worth $200,000, and the loan is for $199,000, that would be considered a high LTV and is more risky for a lender. If this ratio is lower, however, you might be rewarded with a lower interest rate.

Make sure your credit is in excellent shape

While there is no one credit score needed to buy a house, those with higher credit scores have usually demonstrated good financial competency, and those are the types of consumers to whom lenders can offer lower interest rates.

Pay for points 

It it possible to pay extra directly to your lender in order to lower your interest rate. For every one percent of your loan amount you are willing to pay extra, it could amount to as much as half a percent off your interest rate. Essentially, you are just paying a larger amount of interest up-front.

Have a long employment history

Even if you haven’t been at the same job for several decades, demonstrating that you have no (or minimal) periods of unemployment shows lenders they can count on you to pay your mortgage in full every month. This can help lower your interest rate.

Prove income stability

If you can prove that your line of work is in high demand with no sign of slowing down, or if you work for a large, profitable company, your lender may take this into account when processing your paperwork. Income stability will help show that you won’t be likely to miss any mortgage payments.

Lower your debt-to-income ratio

Even with a high credit score, it’s possible to accumulate a lot of debt. Lenders don’t want you using more than roughly 40 percent of your monthly income on your mortgage, car payments, and credit card bills. The lower your debt-to-income ratio, the lower your interest rate will be.

Build up cash reserves

Most people know they should have enough savings to cover about six months worth of bills. Proving to your lender that you can still pay your mortgage in the event of a job loss will help you score a lower interest rate.

Shop around

Different lenders have different criteria for their loans. Finding the one that suits you best can help ensure you get the best possible interest rate for your financial situation.

Close on your loan as quickly as possible

Some buyers need 30 days to close; others might need as much as 60 days. If you can close within the initial 30 day window, however, you might pay as much as a half a percent point less than those who need 60 days to close.

 

Image: iStock

The post 10 Tips to Secure the Best Interest Rate on your Mortgage appeared first on Credit.com.

How the Fed’s Interest Rate Hike Could Impact Your Finances

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It’s widely expected that the Fed will raise interest rates this month, but we won’t know for sure until they meet December 13 and 14. The last time the Federal Reserve raised its benchmark interest rate was a year ago, when it voted to raise the rate from .25% to .5%.

Why should we care?

Consumers should be aware of the rate hike for a simple reason: Lenders and banks base their interest rates on the federal funds rate, so when the benchmark increases or decreases, it can impact rates on products like credit cards, auto loans, mortgage rates, and more.

So, what could change for you?

Mortgage Rates

Cheryl Young, a chief economist at Trulia, says homebuyers don’t need to be terribly worried about an increase in the federal funds rate.

“Don’t rush into a home purchase decision because you think that rates are going to go up,” said Young. “Make sure to take your time and don’t get driven into a hasty decision based on what may or may not happen with rates.”

A Trulia report released Wednesday shows homebuyers are more concerned about saving for a downpayment than rising mortgage rates. Young  says if you are renting and thinking about buying, for the majority of market, buying still makes more financial sense. In fact, mortgage rates would have to double in order to make renting more affordable on the whole.

Existing homeowners and people who are preparing to buy a home soon should take the opportunity to lock in today’s low rates before they rise, says David Demming, CEO of Demming Financial Services in Aurora, Ohio.

Buy when things are cheap,” said DemmingIf you are getting your first house, don’t drag your heels, so that you can lock in the low rate right now. Some lenders will give you a 10-year fixed rate and you should take advantage of those.”

Those who have a balance on a home equity line of credit, or HELOC loan, may want to make some aggressive payments now, warns Margarita Cheng, the CEO of Blue Ocean Global Wealth in Rockville, Md.

“When the prime rate goes up, the interest rate on a home equity line of credit will float up,” says Cheng.

Credit and Savings

“The costs for the credit card lender increases when the benchmark rates go up, so they are then tempted to raise rates on short term loans like credit cards,” says Chris Chen, Wealth Strategist at Insight Financial Strategists in Waltham, Mass.

There is some good news, although it may not be what you wanted to hear. The interest rates on credit cards are already high — currently 15% on average. Even if the Fed raises rates by another .25%, credit card users likely won’t notice.

For savers, however, a rate hike could be good news. You might start to earn more on the cash you have stashed in savings accounts, Money Market funds and CDs. Rates on these products are much lower than prior to the recession but a fed rate hike might make them “just a teeny bit less unattractive,” says Chen.

Car Loans

Car loans are one of those short-term loans you can expect to be influenced by a rise in the funds rate, but borrowers likely won’t feel much of a sting.

To get the best rate on a car loan, you should shop around for a low rate first, then make sure to negotiate the price of the vehicle. Interest rates on car loans are fixed, so if you do that, you’ll be set for a while. Heads up: the current average rate on a 60-month auto loan for a new car is 4.27%.

Investments

Bonds react inversely to the federal funds rate. When interest rates go up, the price of a bond goes down.

“To what degree, we don’t know,” Cheng says. “But that’s why it’s important to be prepared and have diversified investments.”

Don’t panic just because some of your bonds could lose value, adds Kristi Sullivan, the CEO of Sullivan Financial Planning. It’s all part of the cycle.

The Bottom Line

Whether or not the Fed’s December meeting results in an increased funds rate, you should think about your entire financial picture. The general expectation is that rates will continue to increase as the economy strengthens. Keep an eye on your interest rates and maintain a diverse portfolio and you should be prepared for whatever happens.

 

The post How the Fed’s Interest Rate Hike Could Impact Your Finances appeared first on MagnifyMoney.

Can I Get a Mortgage With Student Loan Debt?

student-loan-mortgage

OK, so you’ve graduated college, gotten a decent job and would absolutely love to buy a house. You might even be crashing open houses in the neighborhoods on your buy list, binging on pretzels and chatting with real estate agents just to get the warm fuzzy associated with buying your own piece of the planet. The only problem is, you’re one of the 43 million people in this country who is strapped with student loan debt, and you’re dragging it around like a ball and chain.

Is it still possible to get a mortgage?

Yes, it is possible to get approved for a mortgage with student loan debt — in fact, it might even be easier to secure a mortgage because you have already established a credit history with your student loans, said Brendan Coughlin, head of consumer lending at Citizens Bank.

Hopefully, you’ve been regular with your student loan payments to keep your credit score as high as possible, which will reflect favorably on your mortgage rate and application process. A bad credit score, whether related to missed student loan payments or otherwise, can make it harder to secure a mortgage, at least at an affordable interest rate. (It’s prudent to check your credit before buying a home, and you can see two of your credit scores for free, updated every two weeks, at Credit.com.)

Is a Mortgage’s Interest Rate Higher With Student Debt?

There’s no set formula that says your interest rate will be a point higher with, say, $30,000 in student loan debt, because they’re calculated on a person-by-person basis, said Coughlin.

“When applying for a mortgage, lenders look at a potential borrower’s overall creditworthiness, their ability to pay back the amount they are looking (to borrow), as well as any collateral they have. However, unless you have substantial student loan debt, it is unlikely to impact your interest rate significantly, if at all,” said Coughlin.

But, generally speaking, when it comes to debts and mortgages, you’ll get a lower rate the less debt and the better credit that you have, said Mindy Jensen, community manager of BiggerPockets.com, a real estate networking and information site.

“The lender looks at your debt-to-income ratio, and it can be no higher than 39 to 43%, typically,” Jensen said. “The lower, the better, so if you’ve got significant student loan debt but a low-paying job, you’re going to have a much harder time.”

Student loans can also affect how much mortgage you can qualify for, so you’ll want to talk to a loan officer before you start shopping for a house, said Jensen.

They can also affect your ability to come up with a sizable down payment — which helps to keep your loan payments lower over the course of the loan. Lenders usually prefer people who are able provide large down payments — if you can’t, then high student loan debt coupled with a low down payment will make you look like more of a risk to lenders, said Jensen.

“The closer you are to a 20% down payment, the better your borrower status or the less risky you appear,” she said.

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Mortgage Rates Hit 2016 Low: Is Now the Time to Buy?

Could This Mortgage Innovation Help You Buy a Home?

Here’s some good news for current house hunters: Mortgage rates hit a new low for the year last week. In fact, rates on a 30-year fixed mortgage are at the lowest mark since May 2013, according to the latest mortgage market survey from Freddie Mac.

The 30-year fixed-rate mortgage averaged 3.58% with an average 0.5 point for the week ending April 14, 2016, the mortgage purchaser reported. This rate is down from the prior week when it averaged 3.59%, and from a year ago when it averaged 3.67%.

Meanwhile, the 15-year fixed rate mortgage averaged 2.86% with an average 0.5 point, down year-over-year from an average of 2.94%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.84% with an average 0.4 point, down from 2.88% this time last year.

The weekly survey is based on responses Freddie culls from about 125 lenders on the rates and points for their most popular mortgage products.

What’s Going on With Rates?

It was widely expected that mortgage rates would gradually rise in 2016 after the Federal Reserve began it’s long-speculated move to raise the benchmark federal-funds back in December. (As a quick refresher: the Fed’s benchmark federal-funds rate determines how much interest financial institutions pay to borrow from one another — and when it goes up, so does the prime rate, the lowest rate lenders will charge their most creditworthy consumers.)

The current decrease in mortgage rates is related to an unexpected increase in global demand for 10-year Treasuries at the beginning of the year amid global jitters over stagnating growth in China and its ripple effects, among other things, Lynn Fisher, Vice President of Research and Economics at the Mortgage Bankers Association (MBA), said.

But, barring another unexpected increase, further moves from the Fed should push long-term rates upward.

“MBA currently forecasts the Fed will make two more moves to increase rates this year, with the first rate hike forecasted for the June meeting,” Fisher said in an email.We think that mortgage rates will rise gradually through the end of the year, averaging about 4.2% in the fourth quarter.”

Should I Buy Now?

For those thinking about buying a home in the very near future, it could be good to move on your purchase “to ensure getting a low-rate now” rather than face “the uncertainty in the future,” Heather McRae, a senior loan officer for Chicago Financial Services, said.

Still, prospective homeowners shouldn’t feel inclined to speed up their search or rush to make a decision, because interest rates are just one piece of the home-buying puzzle.

Home prices, for instance, tend to be higher in low-rate environments and fall in higher-rate environments as financing gets less affordable and demand goes down, Scott Sheldon, a senior loan officer at Sonoma County Mortgages and a Credit.com contributor, said. So, buying now could get you a lower interest rate, but waiting could get you a better deal on the home’s purchase price.

At the end of the day, “you’ve got to kind of watch out for yourself,” Sheldon said. “You have to make a decision based on what you feel you can handle.”

Generally speaking, before shopping for a mortgage, you want to make sure you can meet down payment requirements, handle monthly mortgage expenses and safely cover other ancillary costs, like real estate agent fees, property taxes, home insurance, and repairs, to name a few.

You also want to be sure your credit score is in tip-top shape. Scores of 740 and higher generally earn the best terms and conditions on a mortgage, so, if you fall below that line, you may want to work on improving your credit score before you seriously look to buy a home. You can pull your free annual credit reports each year at AnnualCreditReport.com or see your credit scores for free each month on Credit.com to learn where your credit currently stands.

More on Mortgages & Homebuying:

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Mortgage Rates Hit 2016 Low: Is Now the Time to Buy?

Could This Mortgage Innovation Help You Buy a Home?

Here’s some good news for current house hunters: Mortgage rates hit a new low for the year last week. In fact, rates on a 30-year fixed mortgage are at the lowest mark since May 2013, according to the latest mortgage market survey from Freddie Mac.

The 30-year fixed-rate mortgage averaged 3.58% with an average 0.5 point for the week ending April 14, 2016, the mortgage purchaser reported. This rate is down from the prior week when it averaged 3.59%, and from a year ago when it averaged 3.67%.

Meanwhile, the 15-year fixed rate mortgage averaged 2.86% with an average 0.5 point, down year-over-year from an average of 2.94%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.84% with an average 0.4 point, down from 2.88% this time last year.

The weekly survey is based on responses Freddie culls from about 125 lenders on the rates and points for their most popular mortgage products.

What’s Going on With Rates?

It was widely expected that mortgage rates would gradually rise in 2016 after the Federal Reserve began it’s long-speculated move to raise the benchmark federal-funds back in December. (As a quick refresher: the Fed’s benchmark federal-funds rate determines how much interest financial institutions pay to borrow from one another — and when it goes up, so does the prime rate, the lowest rate lenders will charge their most creditworthy consumers.)

The current decrease in mortgage rates is related to an unexpected increase in global demand for 10-year Treasuries at the beginning of the year amid global jitters over stagnating growth in China and its ripple effects, among other things, Lynn Fisher, Vice President of Research and Economics at the Mortgage Bankers Association (MBA), said.

But, barring another unexpected increase, further moves from the Fed should push long-term rates upward.

“MBA currently forecasts the Fed will make two more moves to increase rates this year, with the first rate hike forecasted for the June meeting,” Fisher said in an email.We think that mortgage rates will rise gradually through the end of the year, averaging about 4.2% in the fourth quarter.”

Should I Buy Now?

For those thinking about buying a home in the very near future, it could be good to move on your purchase “to ensure getting a low-rate now” rather than face “the uncertainty in the future,” Heather McRae, a senior loan officer for Chicago Financial Services, said.

Still, prospective homeowners shouldn’t feel inclined to speed up their search or rush to make a decision, because interest rates are just one piece of the home-buying puzzle.

Home prices, for instance, tend to be higher in low-rate environments and fall in higher-rate environments as financing gets less affordable and demand goes down, Scott Sheldon, a senior loan officer at Sonoma County Mortgages and a Credit.com contributor, said. So, buying now could get you a lower interest rate, but waiting could get you a better deal on the home’s purchase price.

At the end of the day, “you’ve got to kind of watch out for yourself,” Sheldon said. “You have to make a decision based on what you feel you can handle.”

Generally speaking, before shopping for a mortgage, you want to make sure you can meet down payment requirements, handle monthly mortgage expenses and safely cover other ancillary costs, like real estate agent fees, property taxes, home insurance, and repairs, to name a few.

You also want to be sure your credit score is in tip-top shape. Scores of 740 and higher generally earn the best terms and conditions on a mortgage, so, if you fall below that line, you may want to work on improving your credit score before you seriously look to buy a home. You can pull your free annual credit reports each year at AnnualCreditReport.com or see your credit scores for free each month on Credit.com to learn where your credit currently stands.

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