If you have been waiting to purchase a home due to the cost of financing, now may be the best time. Mortgage rates were already nearing historic lows, but it seems like they may head even lower. Tuesday the Federal Reserve did an emergency rate drop on the 10-year treasury bond yield. This typically signals a drop in interest rates on mortgages. Last week the 30-year fixed rate mortgage averaged 3.45% and a 15-year fixed rate mortgage fell to 2.95% average. These numbers are courtesy of Freddie Mac.
This makes it more attractive for people to purchase a home because if interest rates and lower, than monthly payments are correspondingly lower. This could be a boon in the spring real estate market which is typically the busiest time of the year. Home prices have been rising all over the Charlotte region with no end in sight to the lack of supply and heavy demand. This has hurt anyone looking for a bargain, but now those people could qualify for a higher priced home if they qualify for the lowest interest rate.
Being locked into a lower interest rate for either a new mortgage or for refinancing an existing mortgage can help lower monthly costs for any family. This opportune time for a rate drop could really bolster the market and mark a trend for the rest of the year. There is also a chance that rates can drop again this year so many buyers may wait to see if they do before they purchase or refinance, but there is also a chance that they remain stable so now could be the best time to jump on these great rates.
One of the reasons that the Federal Reserve has lowered rates at this time is the uncertainty in the economy due to the coronavirus. There is concern about global markets due to the spread of the disease so this move is in part to counteract the concern and make sure that the American markets remain strong and stable.
If you are thinking about purchasing a new home or new to you home, one of the major considerations has to be how much home can you afford. You need to find a lender with a great rate to keep monthly costs as low as possible. This means shopping around for the best rate. This may or may not be with your current bank. Sometimes the smaller banks or credit unions offer the best rates or perks like paying some of your closing costs so you don’t have to bring as much to the closing table.
Deciding the right time to purchase or refinance can be tricky. Buyers remorse can be terrible if rates drop again after you have locked in. You can’t go wrong with these low rates however, they are so much better than the double digit rates that were the standard in the 1980’s. This could be the best time to do a cash-out refinance to renovate your home, or refinance to a 15-year mortgage and keep close to the same payment you have on a 30-year. If you can save close to 1% off your current rate, then the savings may outweigh any closing costs you will have to pay.