Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers
Lowest Mortgage Rates in History: What It Means for Homeowners and Buyers
Be sure to factor in any prepayment penalties and closing costs for your new mortgage, which can average 2% to 5% of your loan amount. We’d be happy to connect you with a mortgage professional in our network who can help you decide if refinancing is a good option for you.
HOW DO LOW MORTGAGE RATES BENEFIT HOME BUYERS?
We’ve already shown how low rates can save you money, but they can also increase our purchasing power. For example, imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 30-year mortgage at 5.0%, you can afford a loan of $279,000.
Now let’s assume the interest rate falls to 3.0%. At that rate, you can afford to borrow $355,000 while still keeping the same %1,500 monthly payment. That’s a budget increase of $76,000! If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home.
HOW LOW COULD MORTGAGE RATES GO?
No one can say with certainty how low mortgage rates will fall or when they will rise again. But forecasters at Freddie Mac and the Mortgage Bankers Association predict 30-year mortgages rates
READY TO TAKE ADVANTAGE OF THE LOWEST MORTGAGE RATES IN HISTORY?
will average 3.2% and 3.5% respectively in 2021. Economists at Fannie Mae expect them to dip even lower to an average of 2.8% next year.
While the forecasts may differ slightly, many experts agree: Those who wait to take advantage of these unprecedented rates could miss out on the deal of a lifetime.
Sources: CNN Business, Freddie Mac, Value Penguin, Bankrate, Freddie Mac June 2020 Quarterly Forecast, Mortgage Bankers Association Mortgage Market Forecast July, 15, 2020, Fannie Mae July 2020 Housing Forecast