It’s a great time to finance a home.
The housing market is still ailing, but for consumers looking for a home and shopping for a mortgage or seeking to refinance, it may not get much better than this.
Then again that is what we said several weeks back when mortgage rates dropped to new record low levels.
Last week, the average conforming 30-year fixed mortgage rate hitting a record low of 4.71 percent according to Bankrate.com. That change coincides with a rate of 4.17 percent for a 15-year fixed rate mortgage and 5.43 percent for jumbo mortgages, both record lows.
Mortgage rates were last above the 6 percent mark in November 2008. Back then the average rate was 6.33 percent, which meant that a $200,000 loan would have carried a monthly payment of $1,241.86. At 4.71 percent, the monthly payment for the same size loan would be just $1,038.48, offering a savings of $203 per month for a homeowner who refinances right now.
Though mortgage rates are low right now, how long rates will be sit at historic levels is a matter of debate. Housing demand is down and the economy remains weak, but any sort of volatility could push rates up sharply in a short amount of time.
Even adjustable rate mortgages (ARMs) have fallen with a 5/1 ARM averaging just 4.07 percent last week.
For every .25 percent rate increase, a $200,000 loan would cost about $24 more per month. That equals an increase of $288 for a year or $8,640 over the life of a thirty-year loan. Clearly, refinancing or locking in a low rate for a home loan now certainly offers an advantage for consumers.
See Also — Federal Housing Finance Agency
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