Have you been told that now is not a good time to buy a house because RBC pre approval mortgage rates are high? Or that you should wait to refinance until rates go down? If so, you’ve been misinformed. This blog post will dispel three common myths about mortgage rates so you can make the best decision for your homebuying or refinancing needs.
TD mortgage interest rates have been on the rise lately, and some people are concerned that this trend will continue, making it more expensive to buy or refinance a home. However, there are many factors that affect mortgage rates, and predictions about where they’re headed can be notoriously difficult. In this blog post, we’ll debunk three common myths about mortgage rates so you can make the best decision for your homebuying or refinancing needs.
Mortgage Rate Myths That Are Hurting You and Why
Myth #1: Mortgage rates always go up when the stock market does.
One of the most common misconceptions about mortgage rates is that they move in lockstep with the stock market. While it’s true that both are influenced by economic conditions, there is not a direct correlation between the two. In fact, sometimes, when the stock market goes down, mortgage rates actually go up—a phenomenon known as an “inverted yield curve”—because investors flock to the stability of bonds, which drives up bond prices and pushes interest rates down. So don’t be discouraged if you see mortgage rates increase even when the stock market is going down—it doesn’t necessarily mean that now is a bad time to buy or refinance.
Myth #2: You should only refinance when interest rates are low.
Many people believe that they should only refinance their mortgage when interest rates are low, but this isn’t always the case. Sure, if you can get a lower interest rate by refinancing, that will save you money over the life of your loan. But there are other factors to consider, like how long you plan to stay in your home and how much equity you have built up. If you have good credit and enough equity in your home, you may be able to qualify for a “cash-out refinance” even if interest rates have gone up since you originally got your mortgage.
Myth #3: Mortgage points don’t matter if you plan on staying in your home for a long time.
Another common misconception is that paying “points” to get a lower interest rate on your mortgage doesn’t make sense if you plan on staying in your home for a long time. But this isn’t necessarily true—it depends on how much cash you have on hand and what kind of return you could get by investing it elsewhere.
For example, let’s say you took out a $250,000 loan at 4% interest with no points paid upfront. If mortgage rates fell to 3%, and you had the cash available to pay 1% (or $2,500) in points upfront, it would save you $41 per month over the life of a 30-year loan—or more than $14,600 over the life of the loan!
In the end
Rates on 30-year fixed-rate mortgages have been creeping up lately but are still near historically low levels. If you’re thinking about buying or refinancing a home, don’t let misinformation about mortgage rates keep you from making what could be one of the biggest financial decisions of your life.