Over the past year, mortgage rates have dropped more than a full percentage point, hitting a new historic low. We have heard about “new historic lows” 15 times. This is a great driver for homeownership, as today’s low rates provide consumers with some significant benefits. Here are three:
- Moving up or moving down in size. One option is to consider moving into a new home, putting equity likely gained in your current house toward a down payment on a new one that better meets your needs. Something that is truly a perfect fit, especially if your lifestyle has changed this year.
- There are many financial and non-financial benefits to owning a home, and the most important thing is to first decide when the time is right for you. You must determine that, but now is a great time to buy or sell if you are considering it.
- Refinance? It is one way to lock in a lower monthly payment and save more over time. However, it also means paying upfront closing costs too. Usually the fees to refinance will run 2-4% of the loan amount. Ask yourself if you intend to stay in the home long enough to recover those costs with the monthly lower rate savings.
Last year mortgage rates were just under 4%. The current rates give the buyer an opportunity for more buying power in this market. Even buyers who can afford to pay cash are taking advantage of these low rates. Those who have been renting can now see affordability advantages to home ownership.