Mortgage rates are currently low, but there is fear and speculation that after September, they will start creeping up.

This increase is likely due to the Federal Reserve's faith that the economy is starting to improve. Unemployment is decreasing, and people are purchasing more goods and services.

If you're in the market to buy a home, now is a good time to start, said Josh Westmark, branch manager at Academy Mortgage in Federal Way.

"It's a hot market," he said. "There tend to be multiple buyers for each property. It's more of a seller's market at this time."

This is driven by a lack of inventory: There are more buyers than there are available homes.

"We're seeing a lot of bidding wars," Westmark said. "The values of homes are increasing quite rapidly across the Puget Sound."

When purchasing a home, the first thing an individual or couple must consider is how much they are able to borrow. Mortgage rates are reliant on multiple variables, Westmark explained.

"One of the primary things that determines where the interest rate falls is (the buyer's) credit score," he said. "(Another) variable is the amount of down payment."

The lower the down payment on the home, the greater the risk for the lender and a higher interest rate.

As for credit scores, if one's credit score is less than 620, he or she can expect about a half a percent higher interest rate on a VA home loan.

"That's because the risk is higher for someone who may have some credit issues," Westmark explained.

Above 620 is a very good credit score for a VA home loan, he added.

When buying a home, it's important for people to show proof of income and employment.

"Interest rates are like bond rates," Westmark said. "It's really the risk of the borrower: credit score, employment, savings ability, more limited credit use. The economy has a major impact on what the interest rates are as well."

Another variable that can impact a mortgage rate is property tax.

"Manufactured housing interest rates could have a higher rate," Westmark said. "It's about a half percent higher rate compared to single-family households."

Finally, the terms of the loan also impact the interest rate.

"A thirty-year loan is about three-quarters of a percent higher than a fifteen-year loan," he said. "So, if (buyers) can go with a shorter loan, they're having a larger monthly payment (but) getting a smaller interest rate."

The variable lengths of loans are 15-, 20- and 30-years.

With rates still low, competition is fierce among buyers.

"It's a matter of getting the right real estate agent and being in the right place at the right time," Westmark said.

Academy Mortgage, 2505 S. 320th St., Ste. 580, Federal Way, 253.941.1600