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Rising borrowing rates could impact home sales, refinances

As the economy and housing market continues to shift, so too will the behavior of existing homeowners and potential home buyers in the Charleston area. One of the biggest motivating factors in deciding to stay in a home or purchase one for the first time is the cost. In order to reduce the cost of a mortgage, owners and buyers seek the best possible rate.

According to reports, home mortgage rates are on the rise. Responding to the collapsing housing market after the recession began in 2008, the "Federal Reserve has poured billions of dollars into the mortgage market." This, in turn, pushed mortgage rates to low levels intended to stimulate real estate transactions, including refinances and home purchases. Recently, however, there was a suggestion that this practice will soon end.

News that the Federal Reserve might shift its approach to home mortgages sent the rate on a "30-year fixed conventional mortgage to 3.90 percent." News that refinances beginning to decline and home purchases are up slightly reflect this upward trend. Existing homeowners feel that current rates aren't low enough to refinance and those looking to buy a home for the first time want to buy before rates go any higher.

As consumers look to make a big financial move, such as buying a home, they may wonder when the best time to move will be. Oftentimes, it's signals from the market that act as the biggest incentive.

In the rush to take advantage of low rates before they climb, there's a chance that mistakes can be made along the way. This may be especially true among first-time homeowners who have never been through the closing process. Realistically speaking, even long-time homeowners looking to refinance could benefit from guidance through their transaction.

Source: NBC News, "Rising mortgage rates could dissuade new home buyers," Diana Olick, May 29, 2013

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