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While 2020 has been a good year to buy a home from a mortgage interest rate standpoint, it has been awful from a housing stock standpoint. A limited supply of available housing has pushed up prices, forcing buyers bidding wars and cause many to stretch their budgets to an uncomfortable degree.
In fact, many potential buyers are told to wait for the market to open with added inventory. The concern, of course, is that they could miss out on current low rates. But a new report from CoreLogic, a leading provider of consumer, financial and real estate data and analytics, reveals that potential buyers not making a home purchase this year should not be concerned. According to that report, mortgage rates are likely to remain extremely competitive for the next three years.
What awaits the mortgage interest?
CoreLogic predicts that the record low mortgage rates we’ve seen in recent months will remain stable in 2021. In fact, we can even see rates below 3% for the 30-year mortgage for the whole year. That aside, it’s a bit more difficult to predict, but CoreLogic thinks mortgage rates will fluctuate around 3.2% on average over the next three years. That is almost a full percentage point lower than the average rate between 2010 and 2019.
How to Pay a High Mortgage Interest
Of course, just because lenders Offering competitive mortgage rates does not automatically mean that you are eligible. But there are steps you can take to increase your chances of getting the best available rates.
1. Increase your credit score
In general, to get a top rate, you need a credit score in the mid-700s or higher. If your score needs to be adjusted, start paying all your incoming bills on time. Also keep track of long-term credit accounts as they will help increase your scorealso. And make sure to check your credit reports for errors. If there is an error in your credit report, it can take your score down. As such, correcting errors can lead to a great improvement.
2. Lower your existing debt
Mortgage lenders don’t want to see that you are already up to your ears in debt. It is a red flag that you are not properly managing your money. And the more debt you have, the more difficult it will be for you to keep track of your monthly payments once you sign a mortgage. Therefore pay off part of the debts is a smart idea.
3. Increase your cash reserves
The more money you have in the bank, the easier it will be to get a loan from a mortgage lender. That’s because your lender will be comfortable knowing that you have personal assets to fall back on – even if you lose your job. You also need a pretty hefty amount to make your down payment, so it never hurts to keep growing your savings.
Will mortgage rates really stay super low until 2023? Without a crystal ball, we just don’t know. But given the state of the U.S. economy and the (likely) protracted recovery, chances are CoreLogic’s prediction is on the money. This means you have a great opportunity to get an affordable mortgage – even if you’re not ready to apply for one right away.