Now might be the best time to lock in a low mortgage rate

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer.  While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5.5%, the time just might be now or never (or at least for a very long time).  This past week, the first week in April, the average 30 year fixed mortgage rate was 5.16%. Today, the rate is listed at 5.23%. The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates.  If you want to refinance or purchase real estate, now might be the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

If you are a first-time home buyer looking in the Smokies, before you even look at houses for sale, the most important thing you can do is figure out exactly how much you can afford on a mortgage payment per month. This will save you wasted time and the disappointment of looking at houses  in Gatlingurg, Pigeon Forge or Sevierville that you may later learn that you simply cannot afford. You first must figure out your debt-to-income ratio. Lenders prefer that you use 36% and under, but you might want to consider using 28% of your gross monthly income for housing expense. Following are the steps to figure out the math:

1. Figure out all of your debt. Multiply your gross monthly income by .36 to find your total allowable monthly debt.
2. Add up all of your fixed monthly expenses.
3. Subtract your fixed monthly expenses from your total allowable monthly debt.

This number is the amount that you have for your mortgage payment, your home owner’s insurance and your property taxes. Keep in mind that here in Sevier County property taxes are very low compared to most areas.

For more help figuring out your total allowable monthly debt see a home affordability calculator.