LOWEST MORTGAGE RATES IN HISTORY
HOW LOW COULD MORTGAGE RATES GO?
To begin low rates can save you money on your mortgage payments and if you meet the mortgage stress-test requirements they can also give a boost to your budget by increasing your purchasing power. Assuming you meet the current mortgage, stress-test requirements, I’ll give you an example.
Imagine you have a budget of $1,500 to put toward your monthly mortgage payment. If you take out a 5-year fixed-rate mortgage at 4.0% amortized over 25 years, you can afford a loan of $285,000.
Now let’s assume the mortgage rate falls to 3.0%. At that rate, you can afford to borrow $317,000 while still keeping the same $1,500 monthly payment.
If the rate falls even further to 2.0%, you can afford to borrow $354,000 and still pay the same $1,500 each month. All because the interest rate fell by two percentage points. If you’ve been priced out of the market before, today’s low rates may put you in a better position to afford your dream home.
HOW CAN I SECURE THE BEST AVAILABLE MORTGAGE RATE?
Step 1 :
Consider a Variable Rate Mortgage. If you’re looking for the lowest rate possible, and you don’t mind the added risk this is a solid option.
Step 2 :
Opt for a Closed Mortgage. These often come with hefty penalties, however they offer lower interest rates than convertible or open mortgages.
Note: not all closed mortgages are created equal. Before you commit, make sure you understand how much you’ll be expected to pay should you need to break your mortgage mid-term
Step 3 :
Give Your Credit Score a Boost. The minimum requirement is ranges from 600 to 680. While there are plenty of banks that are willing to lend to borrowers with a lower score, their best rates go to those with excellent credit. Now there is no fast fix for a bad credit but I can give you some helpful steps
- Dispute inaccuracies on your credit report.
- Pay off debt, or spread it across multiple credit facilities.
- Charge small amounts and then quickly pay off any dormant credit cards.
- To lower your utilization rate, pay your credit card bill before the statement date.
Step 4 :
Make a Large Down Payment. A down payment larger than 20% can bring down borrowing costs even further.
Step 5 :
Shop Around. Rates, terms, and fees can vary widely amongst lenders, so do your homework.
Should you consider breaking your current mortgage?
While forecasts may differ, many experts agree: Those who wait take advantage of these unpresented rates could miss out on a deal of a lifetime.
If you have a variable rate or recently renewed your mortgage, you may already be enjoying the benefits of falling interest rates. But if you’re locked into a higher fixed-rate mortgage for the next several years, you’re probably wondering if it’s a good idea to refinance.
Reduced interest rates can save homeowners a bundle on both monthly payments and interest over the term of a mortgage. When it comes to refinancing, the bigger the spread, the greater the potential savings.
Of course, you’ll need to factor in prepayment penalties and any fees associated with your new mortgage. In some cases, these can cost as much as 4% of the mortgage amount. You can use an online refinance calculator linked in our bio to estimate your potential savings, or I’d be happy to connect you with a mortgage professional who can help you decide if refinancing is a good option for you.
I hope this was helpful, if you’re ready to take advantage of the lowest mortgage rates in history don’t hesitate to contact me!!