Will Congress and the President be able to resolve the debate over the debt ceiling? Probably. If, for some reason, they are unable to agree on a plan and the United States is no longer able to pay it’s debt obligations there could be some bad news for home buyers in the form of higher interest rates. If the debt issue is not resolved then the United States current credit rating of AAA would likely be lowered. As a result, those who lend money to the U.S. would ask for higher interest rates to offset the higher perceived risk. Those higher interest rates would be passed on to consumers who take out new car loans, student loans and mortgages. No one is sure how high interest rates could go in a worst case scenario but they all agree it would mean more bad news for the economy.
If you are currently in the process of buying a home the best way to protect yourself is to lock your interest rate now. Your mortgage broker can explain what options are available. Where you are at in the process will determine how long you should lock for. Your loan program and the length of the lock will determine what, if any, costs may be involved. Generally, interest rates can be locked for 30 days at no cost.
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