Although 2020 is coming to a close, the real estate market isn't finished quite yet. With new, lower interest rates, there is yet another reason for first-time home buyers and current homeowners to buy a home or refinance a mortgage now. Understanding these new interest rates and how they affect your home buying or refinancing process can save you money.
Record Low Rates
Mortgage interest rates just hit record lows, with a 30-year fixed-rate mortgage hovering around 2.67 percent for the week ending December 17, 2020. The average fixed rate for a 15-year mortgage also fell last week to 2.21 percent from 2.26 percent%. This means for people who are thinking about buying a home or refinancing, things just got more interesting.
Interest rates are subject to change, and they can make all the difference when buying a home for the first time or refinancing your current home mortgage. Here's how interest rates are determined and why it’s important to act when the rates drop.
Why Interest Rates Dropped
The Federal Open Market Committee (FOMC) is a group of seven governors of the Federal Reserve Board and five federal reserve bank presidents. Together, this group takes into consideration internal and external factors to make an informed decision on how interest rates should change to reflect the needs of both the people and the financial institutions. The lowering of interest rates stimulates economic growth and lowers financing costs, which can encourage borrowing and investing. This is a key factor when deciding to lower the rates.
First Time Borrowers and Refinancers, Listen Up
Due to the drop in rates, the real estate market just got a lot more appealing for a first time home buyer. If you are considering purchasing a home, the recent drop in rates will save you a substantial amount of money over the lifespan of your loan. For some, this may be the tipping point – you've been thinking about entering the real estate market and now, with these record low rates, you can afford your dream home. Working with an easy mortgage company to obtain mortgage pre-approval and financing for your home will get you one step closer to accomplishing this.
For those who already own a home, now may also be the time to consider refinancing your current home mortgage. Both an FHA streamline refinance and a cash out refinance can save you money, and the record low interest rates can make all the difference.
If you purchased a home in years past, you most likely have a higher interest rate than the current rates. Refinancing your home using an FHA streamline refinance would secure the new lower rate and save you money on your monthly mortgage. A cash out refinance would put money in your pocket, giving you the opportunity to renovate or even build your very own backyard retreat
Take Advantage of Record Low Interest Rates
Whether it be buying a home for the first time or refinancing your current mortgage, we can help you take advantage of the record-low interest rates. As a direct mortgage lender with a digital advantage, Wyndham Capital is here for all of your lending needs.