The Mortgage Rate “Apocalypse”

Mortgage interest rates rose in a big way on Friday, just as inflation runs rampant and the Fed raised interest rates. After this double insult — which feels like a slap in the face for many — interest rates are now hovering around: homebuyers must contend with:

• 4.59% — 30-year, fixed?
• 4.37% — 20-year, fixed?
• 3.76% — 15-year, fixed?
• 4.04% — 7/1 ARM?
• 4.04% — 5/1 ARM?

High interest rates can change the landscape of the housing market for obvious reasons. Some existing homeowners have mortgages that are directly tied to the Fed rate, and some would-be homeowners are finding themselves frozen out of funding. That’s because Debt-to-Income ratios are playing a bigger part in lenders’ decisions, and people who once qualified for one loan are now ineligible for that same loan today.

One way to reduce your Debt-to-Income ratio is to simply reduce the amount of debt you have. I’ve worked with all types of spending plans. Someone who would like to reduce their overall debt is a perfect candidate for?The 50-30-20 plan:?

• 50% of your income should go to your fixed expenses
• 30% is discretionary
• 20% goes to savings?

Sticking to the plan is a proactive, rather than reactive, way to reduce your Debt-to-Income ratio.?The biggest threat to any spending plan or to-do list is having items that you continually ignore or forget about — be practical enough to change your spending plan if you wind up “living a lie.” Make sure your spending plan reflects your lifestyle, cut yourself some slack, and take a long-term view of your finances. And know that falling off your horse and getting back on it is a time-honored tradition shared by most successful people!

Whether you need a coach, a bookkeeper, or help with bill-paying, JHA can assist.?Contact us?to learn more.