With the Fed having raised interest rates up 0.25 percent, many home shoppers, particularly first-time home buyers, might be nervous about the effect increasing rates are going to have on the mortgage rates they’re offered by lenders. There could be some impact on mortgage rates, though the relationship between the rate set by the Federal Reserve and the rates that mortgage shoppers get is hardly linear. There are other areas of finance, in fact, where homebuyers would do well to pay close attention, as the increased rates will most certainly have an impact on what they pay to borrow that money, perhaps more so than the increased rates will have on mortgages.


Credit Cards


Credit card interest rates will most certainly go up for the majority of consumers, and this can be a problem for home shoppers, particularly if they’ve run up high balances on their credit cards. To make sure you get the best possible mortgage rates, pay off your credit cards or, at least, stay current on them and don’t take out any more credit cards. Expect your minimum payments and interest charges to go up, however. Take this as encouragement to control spending, which is a good idea for anyone shopping for a new property.


Student Loans


Many first-time homebuyers have heavy student loan debt. If you’re struggling with this, you’re not alone. The best way to handle this debt is to concentrate your efforts on paying down any private loans you have and then shift your focus to your federal loans. Remember to stay current on all of these loans, as not making your payments will not be looked upon positively by mortgage lenders. Expect your interest rates to increase, whether you have private or government student loans.


Other Large Purchases


If you’re looking for funding to purchase a house, it’s best to put off any other large purchases you might have in mind. Purchasing an auto or another big-ticket item should be put off until you get the home you’re after and the funding to pay for it. While interest rates are going up, it’s still possible to get good rates on lending for a home, but you’ll reduce your chances of doing so if you take any other type of lending.




If you need further advice on securing funding for your home, be sure to talk to us. They know the housing market better than anyone and, while finding affordable funding is obviously a vital concern for anyone looking for a property in Smyrna, Realtors can also reduce your costs in the most direct way possible: by getting sellers to reduce their price!