Lowest Mortgage Rates Are Lower Than Ever
Recently, Freddie Mac announced that the average rate for a 30-year, fixed-rate home loan were the lowest mortgage rates on record. In fact, it prompted the Washington Post to say: "That's an incredibly low rate, and the chance to lock it in for three decades is probably a once-in-a-lifetime opportunity."
Good for the Housing Market
Frank Nothaft, Freddie Mac vice president and chief economist, highlighted the positive impact that low mortgage rates have on the real estate market. He said:
Low mortgage rates and the cumulative decline in house prices have contributed to an extremely affordable housing market and helped spur home sales this year. For instance, total new and existing home sales in October were 36 percent higher than their January low on a seasonally adjusted, annualized rate...
Best Mortgage Rates Not Available to Everyone
However, not everyone can take advantage of the very best mortgage rates. In order to qualify, you're likely to need:
- A FICO credit score of at least 730
- A down payment of 20 percent
Of course, there's an excellent chance of getting a great deal even if you can't meet those stringent criteria. But you are probably going to have to pay a higher rate, and/or upfront costs.
For example, if you can't raise a full 20 percent down payment, you can always apply for a Federal Housing Administration-backed mortgage loan. With these, your deposit can be as little as 3.5 percent; however, you may have to pay a slightly higher rate and provide an upfront insurance premium along with usual closing costs.
Home Refinance Opportunities Are Irresistible
Columnist Laurent Belsie told his readers in The Christian Science Monitor about the attractive savings offered by record low refinance rates. He gave details of his own recent refinancing:
My own experience is a somewhat useful example, since last week I locked in a 4.75 percent rate at a cost of $2,800. That lower rate should save me about $75 a month. If I stay in the house 10 years, that's $9,000.
Think of it as a return on an investment, says Jack Friedman, a real estate economist in Dallas, who used a financial calculator to come up with the result. To receive $75 in "interest" every month for 10 years on a $2,800 certificate of deposit, a bank would have to offer me a 30 percent interest rate.
Always Compare Current Mortgage Rates
Whether you're thinking of buying your first home, moving house, or refinancing, the golden rule is to always check out the market first. Compare mortgage rates now.