Low Interest Rates Environment...
Through these unprecedented times, we’ve been hard-pressed to find good news. I’m pleased to say that here in the mortgage industry we have been blessed with interest rates at all-time lows, allowing us to help a record number of homebuyers and homeowners.
These low rates have fueled a refinance boom and has helped home buyers increase their buying power. Prior to the drop-in rates, many buyers were locking in the low 4’s and high 3’s. Now many buyers are able to borrow at rates in the 2’s.
For easy math, let’s look at a thirty-year loan of $400,000. At 4% interest that would result in a principal and interest payment of $1,909.66. That same loan at 3% would yield a payment of $1,686.42. That 1% difference in rate provides savings of over $223 per month. And a buyer who qualified for a $400,000 loan at the 4% rate would qualify for a $450,000 loan at a 3% rate. These low rates are also allowing many buyers to consider a 15-year loan where they could not in the past.
Some segments of the buying population may find the terms not quite as attractive, however. Buyers looking at Jumbo loans may find they need to come up with a larger down payment and the rates on Jumbo loans aren’t as low as those within the conforming loan limits. Also, buyers with credit scores on the lower end of the spectrum are findings the price adjustments cause their rates to be higher than they would expect considering how low rates are in general. My advice for buyers in these situations is to seek pre-approval early to see if any action needs to be taken to address credit issues or to free up funds for a larger down payment. Of course, I always recommend one get pre-qualified in advance of looking at homes. It really is never too early to research your options and set a plan.
We’ve seen a lot of people who now find that they can work from home. And many people have found that they can make that home wherever they like. “Location, location, location” has been replaced by functionality and “room to roam”. It is less about the commute to the office as it is the walk to the swimming pool.
Whatever moves you to consider a home purchase, make sure to get your loan approval out of the way early so you can shop with confidence and with a plan in place.
Todd Wiggins Loan Originator, NMLS 211744 with FirstBank Mortgage 615-554-1983 mobile
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Jarod Tanksley 615.403.8265
Brentview Realty 615.373.2814