I’ve tracked mortgage rates from lenders for years, always to keep my knowledge current on the financing end of things. Just about every day, I receive rate updates from several different lenders. In years past I remember mortgage rates that were a LOT different than now-a-days. More than double what they are now. But mortgage rates lately have been steady for quite a while now at around the 5% level for fixed rate/30 year conventional mortgage loans. These are loans with no discount points and just standard closing costs for the borrower. Standard closing costs vary between lenders but typically run about $1,800 from a solid lender. They are just the normal costs necessary for a lender to process a loan request. The 30 year fixed rate mortgage is probably the most popular product that most people choose when financing a purchase or refinancing. More first-time buyers probably choose an FHA type 30 year mortgage because the down payment required is less…around 3.5% of the purchase price, compared to 10 to 20% down minimum using a conventional loan. FHA rates are usually just a bit higher but really worth it if down payment is an issue. Lots of times too, the seller will agree to pay some or all of the buyers transaction and loan closing costs, so it takes very little cash to buy a home. For a little while longer, there are tax credits for almost anyone who buys a home…first-time buyer or even long time owners. That program will expire though soon.
That’s at least one good thing about a slower economy. It puts downward pressure on interest rates. When the economy heats up again, which it will, the rates will go up. A hotter economy also will put upward pressure on prices. That added to higher rates means housing becomes less affordable. When rates are so steady and so inexpensive for such a long time, we all are spoiled by them. Relatively speaking, there probably has not been a better time to buy a home in the last 50 years or more. Lots of inventory to choose from, low prices, low interest rates and even tax credits. The perfect storm. We’ll look back later at this time and realize it was one of the best opportunities ever.
Mortgage Rate Update – For a look at current mortgage interest rates, see Today’s Rates.
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