If you’re looking to buy your first home, a bigger home, or refinance the one you currently own, you are in luck. Mortgage rates have been decreasing and are at the lowest point in 3 years. In January 2020, mortgage rates were less than 4%. These lower rates may signal that the time for you to purchase your new home, or refinance the one you live in now, is right.
A few things you need to consider with these lower rates are:
How much can lower mortgage rates save?
Even a fraction of one percent can equate to significant amounts of money when it comes to mortgage rates, especially the traditional 30-year mortgage loan. Not only will the monthly mortgage payment be lower than with a higher rate, you end up paying hundreds, or even thousands, of dollars less for the property.
Want to see how much a lower interest rate could save you? Check out our interactive mortgage calculator.
What does this mean to you?
If you’re buying a home, a lower interest rate can help you afford a higher-priced home. Or, it can make it easier to afford a house payment in your budget. Lower rates also free up money for other expenditures.
Refinancing your current home with a lower interest rate can possibly allow you to get into a shorter-term mortgage loan so you can pay your home off more quickly. It can also lower your payment, so your budget isn’t as tight as before.
What is a fixed-rate mortgage?
A potential homeowner needs to understand all the mortgage loans available, especially the fixed-rate mortgage. This type of mortgage, which you can qualify for as a 15-year, 20-year, 30-year or other terms, keeps the mortgage interest rate the same throughout the life of the loan. When rates are historically low, as they are now, choosing a fixed-rate mortgage is a smart decision for your budget. Locking in the same rate, and the same principal and interest payment, gives you stability and helps you budget now and in the future.
How do I go about refinancing my mortgage?
The first thing to do if you are interested in refinancing your home is to call MIG and talk with one of our loan officers. They can quickly run your numbers and give you a broad snapshot of how refinancing would affect your finances. You may choose a shorter-term mortgage, a cash-out refi, or an option that lowers your monthly payment significantly. If one of the scenarios is appealing, you will need to send in some financial documents and agree to let your credit report be pulled. You may need to pay for an appraiser to determine your home’s worth. Once you get to closing, your loan officer can advise you if you need to pay anything out-of-pocket or if you should roll all costs into your mortgage loan. Typically, refinancing your home gives you a breather by letting you “skip” a payment between when your last payment was due and when the payment on your new loan is due.
With mortgage rates at a 3-year low, it may be time for you to look into either buying a new home or refinancing the one you own. What you shouldn’t do is expect them to stay this low forever. Mortgage rates are continuously shifting and changing, so chances are good that we will see an increase in them sooner rather than later.
If you are interested in taking advantage of the low mortgage interest rates available to you, contact MIG today to see if taking action would benefit you. We offer free consultations and will lay out a plan that’s right for you.
Programs based on borrower qualification.