By now, you have probably heard that mortgage rates are at historic lows. However, it can be a little harder to get to an explanation of what this actually means. It’s important to understand how this might affect you if you are buying or refinancing a home.
Are Mortgage Rates Really Low?
To understand this, you have to understand what affects mortgage rates in the first place. There are three factors currently dragging mortgage rates down.
- Overall economic uncertainty as we emerge from the COVID-19 pandemic. The fact that recovery from the pandemic is not straightforward in terms of either epidemiology or politics is pushing rates back down.
- A low federal interest rate. The Federal Reserve has lowered the interest rate in order to help the uncertain economy. While they do not set mortgage rates and their decisions don’t affect mortgage rates directly, they affect how much banks have to pay each other in interest.
- A lively housing market as the pandemic causes people to rethink where they live and what kind of house they want.
All of this is keeping rates low, and this may stay the case until the end of 2022.
How Does This Affect Homebuyers?
First of all, the interest rate is somewhat mitigating the fact that we are currently in a sellers’ market. Low inventory and high demand means house prices are up. However, the lower interest rate affects the monthly payments, and may allow you to afford a lower Indiana mortgage loan.
Be aware that fixed-rate mortgages tend to have a slightly higher rate, and adjustable rate ones may change dramatically if interest rates do happen to go up significantly as the economy moves to full recovery. However, this is still a great opportunity to lock in a low interest rate, at least for a while.
It might mean that now is a good time to buy even if the market is favoring sellers. If you are selling an existing home, then it’s the perfect time to move. But if you have always wanted to buy a home, now is a great time to talk to First Option Mortgage about what kind of deal you can get.
How Does This Affect Refinancing?
It’s more clear cut if you are looking to refinance to get lower rates, or even to get cash for an extension or emergency. This really is a good time to refinance. The general rule of thumb is that the best time to refinance your Indiana home is when the rates you are paying are one percent or more higher than the rate you can get. However, you should start looking at half a percent. This is much more likely to be true than normal.
However, you should also consider things like why you are refinancing (a definite no-brainer if you have enough equity to get rid of mortgage insurance payments) and what your credit score is. You should also check property values in your neighborhood. Increasing value may mean that you no longer have the desired 20% equity and it would be better to wait.
Mortgage rates being low means you can get a better deal on a mortgage or refinance, but you should still check all of the other factors, such as your credit score, debt-to-income ratio and equity. That said, now is a good time to look into buying or refinancing, to take advantage of historically low rates that are likely to increase by 2023.
Give us a call and we’ll gladly walk you through the process of either a home mortgage or refinancing regardless of where the market or rates are at.
Our mortgage lending experience is simple and easy to start. Speak with one of our friendly and experienced mortgage professionals today!
First of all would like to thank Nicole for her dedication and hard work she help me all the way to the end. I recommend First option to anyone. She was with me from April to January all the way. Helping me understand all about purchasing a home. Thank you all so very much
My favorite mortgage company, we got great rate on our refinance and everything was so easy and done from the comfort of our home. We are so happy with our refinancing. Call them today.
Jarad and Brandon will go all out to make everything with your mortgage go so smoothly! I had such a great experience in 2015, I referred them to my BF and he had the same experience! Decided to refinance my property this year and my experience was even better than before.
Clark Sigmund made sure we understood everything in the process of buying our new home, helped us a ton along the way, and made sure we closed on time!!! 10/10 would recommend and use Clark with First Option again!! You won’t be disappointed!
Everything went great from the first phone call to the closing. The staff, especially Nicole and Brad, were very professional and knowledgeable about the procedures and the paper work that was needed for the completion process. Thank you for your hard work and dedication!