It's Christmas in July for prospective home buyers. Mortgage rates for two key benchmark loans dropped by an average of two basis points each. Low home prices and lower mortgage rates are offering unprecedented opportunities for first-time buyers.
HSH Associates reports that average mortgage rates for a 30-year fixed-rate mortgage (FRM) loan fell from 5.00% to 4.98%. Rates for a 15-year FRM are also lower by 0.02%, moving from last week's average of 4.48% to 4.46%.
5/1 adjustable-rate mortgages (ARMs) dropped an average of 5 basis points, from 4.03% to 3.98%--an outstanding opportunity for buying a first home with an affordable monthly payment for 5 years.
Mortgage Rates, Home Prices Increase Affordability
If you're short of funds for covering your down payment and closing costs, don't presume that you're shut out of today's low home prices and and record low mortgage rates. Check with your state and local housing finance departments to see if there are first-time home buyer assistance programs available.
Programs promoting home ownership typically provide financial assistance in the form of low-cost loans for covering closing costs or a down payment. A few things to know about government down payment assistance programs:
- Buyers are typically required to put in a small amount of cash, but these loans can cover most of the up-front costs of buying a home.
- Although designed to assist first-time buyers, a first-time buyer is generally defined as anyone who has not owned a home in the preceding three years. This policy accommodates buyers who have previously owned a home and want to buy another one.
- Assistance loans require low or no monthly payments. Programs vary, so its important to get the details from any programs you're considering.
- State housing finance agencies may also offer "silent" second mortgage loans that don't require payments until you vacate the home you're buying.
Most first-time buyer programs have eligibility requirements including owner occupancy of the home being purchased, attendance of homeowner education courses, and income eligibility limits.
Mortgage Lenders Can Refer You to Buyer Assistance Programs
Ask real estate professionals and potential mortgage lenders about first-time buyer programs in your area. Contact your state's housing agency for more information on state home ownership programs. These programs can help you qualify for an affordable mortgage at today's mortgage rates.
Our live database of current mortgage rates can help you find the best mortgage rates in your area.