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With the more than 5% increase in mortgage rates, buyers will now need more than 30% of median household income to pay for a loan. Consequently, the ability to buy houses among homebuyers has been reduced. 

Additionally, house sales have decreased with the low demand coupled with the scarcity of houses in the market. In fact, the house sales for march 2022 were 4.5% lower compared to a similar period in 2021.¹ If you are finding it difficult to navigate the high mortgage rates, read on for tips to help you handle them.

How to Handle the Rising Mortgage Rates

Even though the rates for 30-year fixed mortgages have already hit above 5%, market forecasts show that the rates may still continue rising through the year. Here are ways to get through the high rates when planning to buy a home or refinance an existing mortgage.

Opt For Adjustable Mortgage Terms

One of the best ways to avoid high rates is by choosing adjustable interest mortgage instead of fixed-rate mortgages. Adjustable-rate mortgages (ARM) allow you to enjoy lower interests for specified periods after which the rates fluctuate according to the market. Examples include 5/1, 7/1, and 10/1.

For instance, the current rate of a 5/1 ARM is 3.78% which is way lower than the fixed-rate going at 5.1% according to Freddie Mac.² At the end of five years, the rate will start to vary each year. This kind of mortgage will save you money especially if you don’t plan to use the home for long.

Opt for a Conventional Mortgage Instead of an FHA Mortgage

In most cases, FHA mortgages are preferable due to lower downpayment requirements. However, FHA mortgages end up being costlier than conventional ones due to higher insurance costs.

Therefore, if you can get approved for a home loan by a conventional lender, you can avoid such expenses that raise the cost of your mortgage.

Save a Larger Down Payment

A mortgage that allows you to pay a  low downpayment can help you get home faster and hold more cash. However, in a situation where rates are skyrocketing, a low downpayment means larger monthly repayments.

Fortunately, if you have a larger downpayment, you will have a smaller debt thus helping you lower the impact of the huge rates.

Use Mortgage Points

Finally, you can use discount points to lower your mortgage rate. A single discount point is worth 1% of your loan amount. For instance, if your mortgage is worth $ 300,000 then one mortgage point will cost you $ 3,000.

Each discount point will lower your interest rate by a given percentage depending on the lender. Generally, you may expect about a .25% reduction. If you opt for this strategy, note that the mortgage points will be added to the closing costs

Tackle the Rising Mortgage Rates With the Above Tips

You can lower the amount of interest due on your mortgage by choosing mortgages with adjustable rates, using mortgage points, choosing conventional mortgages, and paying a larger downpayment.

“About Mountain West Financial and the CalPATH Home Loan Program

Mountain West Financial is the exclusive lender offering CalPATH, the #1 home loan program for Teachers, Police Officers, Firefighters, and other public employees who serve our local California communities.

You may contact our CalPATH Hotline @ 800-310-7577, seven days a week from (8:30 am to 8:00 pm) or visit our website @ A CalPATH advisor will be standing by to answer (any & all) questions you may have about the home buying or refinance process.

We look forward to working with you soon!


Joe Moore

CalPATH Division Manager

NMLS #333648″

Links to External Sources:

  1. Low house sales
  2. Primary mortgage market survey