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Have mortgage rates leveled off?

Q: Have mortgage rates finally stabilized? If so, does that mean I can take my time about finding a house, without worrying about locking in a mortgage before they go any higher?

A: Certainly, mortgage rates have leveled off of late, but that does not mean you should be complacent about them staying put.

You can and should take your time in finding a home -- it is a decision you are going to live with every day for a long time, so make it the right one. Still, if you have decided to buy, you should be searching diligently because there is no telling how long rates will remain as stable as they have been in early 2014.

Rates rose sharply in May and June of last year but have essentially just bounced up and down within a narrow range since. One reason is that the economy's momentum seems to have stalled; but if the end of an especially harsh winter prompts a pick-up in economic activity, that could push rates higher. Another reason mortgage rates have been so calm is that inflation has been so mild -- just 1.1 percent for the year ending February 28. However, inflation has a way of flaring up when you least expect it.

One of the most noteworthy things about today's mortgage rates is that the spread between 30-year and 15-year mortgage rates recently widened to a full percentage point. Fifteen-year mortgage loans are not for everybody because they mean taking on a steeper repayment schedule; but for those who can afford a higher monthly payment, shorter mortgages save money in the long run. This is especially true now, when choosing a 15-year mortgage means you can turn back the clock to when loan rates were comfortably below 3.5 percent.

In the context of your question, you could look at turning back the clock via a shorter mortgage as a way to buy yourself some extra time to find the right home.

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