By now, historically low mortgage rates probably don’t seem like news anymore. The week of July 16 the average 30-year fixed rate declined for the third week in a row, falling to 2.98%*, which is the lowest rate on record since Freddie Mac began tracking rates in 1971.
If you’re in the market for a new home, you know that lower rates mean lower monthly mortgage payments. As rates decline, buying a home becomes more affordable. That dream house you had your eye on a month or two ago that was just out of your reach financially might be within your budget today. Or maybe you found a house in a great neighborhood and the perfect school district that needed a little updating you couldn’t afford when rates were higher.
With lower rates, you can often get more for your money or afford to put more money into a house that needs a little TLC. For example, if you buy a $450,000 house at an interest rate of 4.5% (5.009% APR) and put 10% down, your monthly principal and interest (P&I) payment would be just over $2,052. But if you bought the same house and had a mortgage rate of 3.0% (3.416% APR), your monthly P&I would decrease to about $1,707. That’s more than a $300 difference you could use to buy a more expensive home or make renovations to a fixer upper.
We don’t know how long rates are going to stay this low. So, if you’ve been thinking about buying a house, now could be a good time to lock in your rate and avoid paying more in interest. Or, if you already have the home of your dreams, you could take advantage of historically low rates to refinance and free up extra cash you can use for other things.
Whether you want to buy or refinance, your HFG Licensed Mortgage Professional is ready to help you get started today.
*Source: www.freddiemac.com/pmms. Actual rates depend on many factors, including credit score, LTV, transaction and property type, discount points and occupancy.