Mortgage Rates Remain Historically Low

Although there have been some jitters in markets in recent weeks about the possibility of rising interest rates, officials have not yet moved to raise rates and may not do so for quite some time. As a result, mortgage rates have remained at or near their historic lows that have been the norm for the past few years. Anyone bold enough to make the claim back in 2010 or 2011 that mortgage rates would be as low as they currently are here in 2015 would probably have been called crazy.

This is great news for people that have been wanting to buy a home or even refinance an existing home. While the threat of rising interest rates is always a concern, it appears there is still time for people wanting to take advantage of these low rates before things change. Mortgage rates have been hanging around the vicinity of 4 percent for a few years, and that’s just fine with buyers and those looking to lower their existing payments buy re-financing.

Mortgage rates always fluctuate a little and a look back just a few years demonstrates that very well. Even so, getting a loan on the worst day for rates over the last four years or so would still have resulted in a good deal, especially when you think about where rates were in the not-so-distant past. At one point during September of 2014 we saw the highest rate that we have seen in the last four years when it went up to 4.625 percent. That might cause some heartburn for those who were hoping to lock in a little lower around that time period, but it’s still a dream number for those that once held mortgages with rates well into double digits!

More recently, borrowers can lock in a rate of around 3.875 percent without having to beat the bushes too hard to find the best deal. While these numbers sound very enticing, it’s important to remember that these are the kinds of numbers that are available to the most qualified buyers. That means borrowers who have excellent credit and are laying down 20 percent or more of their own cash as part of the deal for a home that will be their primary residence. They will also most likely have debt that totals less than 45 percent of their income.

It’s pretty well-known that the mortgage rate will have a hug impact on the monthly payments a borrower is expected to make, but it becomes evident how dramatic that difference is when you run through a real-world scenario or two.

For example, let’s say someone wants to buy a $350,000 home and is able to make a down payment of 20 percent. At 4 percent the payment will end up being around $1,300 per month. By raising the interest rate up just 1 percentage point to 5 percent, that $1,300 payment becomes $1,500 – a difference of $200, which equals a whopping $2,400 per year and almost $35,000 more over the life of a 30-year loan!

For those who may be thinking about buying a home or refinancing their existing mortgage, it may be time to pull the trigger. Most experts agree that these low rates should stick around for a while longer, but nobody really knows for how long. It’s important to remember that world events can have an impact on rates and we have seen some serious volatility in the stock market in recent days, which may mean there is some kind of change on the horizon that could influence officials to raise rates.

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