Mortgage rates fell across the board as worldwide economic uncertainty took hold. What's bad for economic growth, though, is encouraging for borrowers as the spring and summer home buying season gets under way. Current mortgage rates can help you find affordable mortgage loan options.
HSH Associates reported that the combined average mortgage rate for a 30-year fixed-rate mortgage (FRM) averaged 5.32% the week of May 3. This is down 4 basis points (0.04%) from last week's average rate of 5.36%. Borrowers seeking even lower mortgage rates may want to consider a 15-year FRM; average rates for these home loans fell by 5 basis points (0.05%) from 4.77% to 4.72%.
A 5/1 hybrid adjustable-rate mortgage (ARM) provides an attractive option for first-time buyers. This mortgage offers a low fixed rate for 5 years and converts to an ARM thereafter. The 5/1 hybrid ARM offers lower payments when new homeowners need it most--at the beginning of the loan term. Last week, average rates for 5/1 ARM loans fell from 4.41% to an attractive 4.38%.
Low Mortgage Rates Provide First Time Homeowners with Extra Cash
It's natural to celebrate buying a new home, but overspending when you move into your first home can cause problems if you don't factor in the costs of owning a home that you didn't pay when renting. These costs can include:
- Property taxes, hazard insurance, and possibly mortgage insurance: Property taxes can rise dramatically if your property value is initially assessed as unimproved land. This can occur if you're buying a home in a brand-new development. If amounts for taxes and insurance are included in your mortgage payments, keep in mind that taxes and insurance costs are subject to annual review and adjustment.
- Utilities, water, sewer, and trash collection services: Although you may have paid some utilities as a renter, owning a home means being responsible for all utility bills.
- Homeowners' association (HOA) dues: You can expect to pay HOA fees if you own a condominium or bought a home in a neighborhood that has an HOA. These fees can increase if funds are needed for repairing common areas or building exteriors.
If you're unsure about how to adjust your budget and savings planning to meet the expenses of owning a home, consult a financial planner or tax advisor.
Our live database of current mortgage rates can help you find the best mortgage rates in your area.