According to The Mortgage Reports, mortgage rates have hit record lows 11 times this year! So will they go up or down? It’s difficult to predict how mortgage rates will react, especially in the face of so many economic changes. While there’s often a lot of talk about mortgage rates, what do they actually mean for buyers and sellers? For homebuyers, low rates offer a great chance to increase their buying power. When it comes to selling a house, lower rates can mean that buyers are ready to move quickly!
How do mortgage rates impact homebuyers?
It’s no secret that low mortgage rates benefit homebuyers since a lower rate can contribute to an overall lower monthly payment. With continual growth in the housing market fueled by low rates, buyers can seize the opportunity to purchase a new home. Low rates can also benefit sellers, as buyers are motivated to take advantage of low rates.
What do low mortgage rates mean for the bottom line?
While everyone’s mortgage situation is different, here’s a simple way to see what a big difference mortgage rates can make. Keep in mind that you should speak with a mortgage expert if you want a detailed overview of your specific loan options.
Here’s a general example:
Let’s say you want to keep your monthly payment on a 30-year mortgage around $1,900.
If mortgage rates are at 4.25%, your payment on a $400,000 house would be around $1,900. However, if mortgage rates are at 3.5%, you might be able to buy a home that costs about $425,000 for a similar monthly payment. That’s a lot of extra buying power!
Lower interest rates give homebuyers the option to expand their home shopping budget and look at homes that may not be in their budget with higher mortgage rates.
When should you lock your mortgage rate?
Locking your mortgage rate means that your interest rate won’t change between the offer and closing, as long as you close within the specified time frame and there are no changes in your application. It’s best to speak with your home loan expert about when to lock your rate, but most people lock their rate when they feel comfortable with the rate and estimated payment.
How low will mortgage rates go?
The quick answer is - no one knows! Rates can go up or down based on a variety of factors. The challenges we’ve faced in 2020 mean that rates are even more unpredictable. Timing the market is an impossible task, so you should start looking for a home when it’s right for you.
If you’re wondering about your home purchase options, reach out to me today. I’m happy to have a conversation with you about what’s going on in the market. I can also connect you with a home loan expert who can discuss your unique situation and identify what type of mortgage might work for you. Contact me at 8Z Real Estate today!