It is a great time for buying a house as mortgage rates are less than 4%. The lenders today are faced with the worst demand and supply scenario, which has pushed the mortgage rates at an all-time low of 3.87% starting June 1, 2020. While it remains to be a challenge on the lender’s side, it is definitely the best time for the borrowers to lock in if they are on the outlook of buying a place of their own.
As per LendingTree, the borrowers with an average credit score between 720 and 759 are most likely to receive a mortgage rate of 3.46%. The biggest savings can also be seen for homeowners in San Francisco who can nearly save up to $58,000 if they refinance right now.
Similarly, for applicants with an average score between 640 and 679, the mortgage score will average around 3.87%, as predicted by our CEO, Joe Chavarria. If you want to see it in terms of a dollar amount, a monthly payment of around $1,400 can help you purchase a house listed for $225,000 – which is currently the average home price in Dallas.
So this means you can buy a good three, four, or five-bedroom house in a good school district with this dollar amount if you do not go for buying your own house and continue renting an apartment unit at $1400. If you miss this golden opportunity, then you may not get a similar situation in maybe the next ten years. This will mean that after ten years, you will still be renting and won’t own a house. So it is perhaps the best time to pay off your credit and make an investment.
While the mortgage rates have been incredibly low, but they are not expected to go further down. The rates are expected to stay below 4% throughout the year 2020 as per industry experts. So if asked, yesterday was the best time to buy, but today is the second-best time to make a move and lock in the house you want to purchase.
1. Opportunity to Refinance Mortgage
It’s also an excellent time to refinance your mortgage and potentially save a lot of money. While sometimes, when you reach out to the banks for refinancing options, you have to pay upfront closing costs. While in some cases, you may be able to get away without paying a closing cost but instead pay a slightly higher mortgage rate over the years.
2. How Is the Housing Market Responding?
The average borrower could save $277 a month on a 30-year fixed loan. If all the borrowers could do that, it would save 3.5 billion dollars in monthly payments, according to Freddie Mac sources. Now while the applications for refinancing may have gone up, the new mortgage applications are not increasing by the same rate reason being homeowners fear what the economic scenario might look like due to Covid-19.
3. Rent Vs. Equity
Refinancing your home loan is another option available to buyers if you bought the house five to ten years ago. Today the rates are as low as 3.87%, and by refinancing your property, you would be able to save a considerable amount of money.
Circling back to the same point Joe made earlier with a monthly mortgage of $1,400 a month, you will own a house in 30 years. While with the same payment going towards rent, you get nothing at the end of 30 years, and you will have no equity.
So it’s an excellent time for you to lock in the rates if you have been looking to buy a house.