Here’s what to consider if you’re house hunting

ByRichard C. Sloan

May 4, 2022

COLORADO SPRINGS — It’s no secret that mortgage rates are rising rapidly.

Just over a year ago, homebuyers could lock in rates below 3%. This is no longer the case, but is now the best time to hurry and lock in a fare?

The housing market in Colorado Springs still looks hot with no immediate signs of slowing down.


Aerial drone video of a neighborhood in Colorado Springs

Mortgage rates are always competitive, but experts say there are a few factors you should consider before withdrawing your credit.

In 2020, interest rates fell below 3% for a 30-year fixed loan. Today, rates are between 5 and 6% for most buyers with good credit.

“Although the rate hikes seem high and they happened very quickly, they are still where they were before the pandemic,” said Shanon Schinkel, a loan originator at NFM Lending.

NFM Loans


NFM Loans

She says that although interest rates have skyrocketed in recent months, now is not the time to panic.

“Most lenders have a lock-and-store policy,” she said. “If you’re not ready to buy now, you can always lock in a loan for 60-90 days.”

Some lenders will even allow homebuyers to lock in a longer term loan, giving you more security in this market.

However, Schinkel says it’s more important for homebuyers to do their research first by shopping around, comparing rates and not necessarily going for the cheapest rate.

Here’s why:

“Sometimes fares seem cheaper and may seem better, but not always,” she said. “I’ve seen closing costs tens of thousands of dollars higher in order to secure that rate, so be careful.”

Shanon Schinkel


Shanon Schinkel in her office at NFM Lending

Homes in the Pikes Peak area are also selling above asking price and, in some cases, above appraised value.

Without a 20% down payment or securing a mortgage through a VA loan, you’ll likely end up paying for private mortgage insurance (PMI).

PMI increases your monthly payment and this is a cost you need to consider with your loan.

“Mortgage insurance at one time was avoided like the plague because it was expensive and added so much to your monthly payment,” she said. “Right now it’s not as expensive as it used to be. Under current tax law it’s tax deductible, so it’s not the kiss of death it used to be. I encourage people , even with mortgage insurance, to consider buying a home, even if you don’t have 20% down.

Schinkel says the 20% down payment rule is a misconception.

You don’t have to put down a down payment with a VA loan, and first-time home buyers can get a mortgage with as little as 3% down.

Schinkel says that even with a 5% fixed loan over 30 years, homes appreciate about 13% in the Pikes Peak area each year.

housing market

Graphic department KOAA

Mortgage and housing statistics

For those who are skeptical or worried about a possible stock market crash and want to get a cheaper interest rate in the short term, an adjustable rate mortgage or “ARM” may seem more attractive. However, Schinkel says buyers should exercise caution.

“An ARM will become more popular as rates go up,” she said. “For the last couple of years they haven’t been because the 30 year fixed loans are so low. As they go up it’s a way to save money a month because interest rates are lower because they are fixed for a short period of time.”

If you only plan to live in a home for a few years, Schinkel says an ARM is an option on the table. She warns that those rates can change by up to 5% after the fixed rate period ends, and that can put some people in a bad spot if they plan to be in a long-term home and can’t refinance.

In addition to interest rates, Schinkel says it’s important to analyze all closing costs and fees. In the months leading up to the sale of a home, buyers should not have large deposits, withdrawals, or large purchases that could affect financing.

Need help calculating your mortgage payment? Click here for a free calculator.

For more information on the evolution of mortgage rates over the past decades, click here.