By Doug Goelz, Mortgage Services
To the surprise of many, mortgage rates have dropped in the past few weeks to levels we haven’t seen in a year or more. The tariff wars and fears of economic slowdown have been the main drivers of lower rates. In general, lower interest rates are considered good for those seeking to buy and finance a property, and even for those who already own.
For a prospective property buyer, lower rates obviously mean you may end up spending less on interest on your new loan than you might have 6 months ago.
Lower rates also might let you buy a higher priced property. With lower interest rates, you can borrow more and still keep your monthly housing payment within a lender’s maximum guideline. As long as you have the necessary down payment for a higher price, the increase in loan amount for which you will qualify at lower rates means you may be able to buy a higher-priced home.
On the other hand, if you already can buy at the price you want, but you need a down payment of more than 20% in order to keep your housing payment within the lender’s maximum guideline, lower interest rates might mean that you can borrow more and put less down.
If you already have a mortgage, lower interest rates mean you may be able to lower your monthly payment by refinancing your current balance at a lower rate. Or, you might refinance with a shorter term loan (e.g., go from a 30 year loan to a 15 year loan). Your monthly payment may be higher, but you could pay off the loan years earlier than with a 30 year loan and save tens of thousands in interest over the life of the loan. Or, you might be able to refinance for more than your current balance (a “cash out refi”) at a lower rate. Your monthly payment might still increase (depending on how much cash out you take), but you probably can refinance with a “cash out” loan now at a lower rate than it would have been 6 months ago.
Feel free to get in touch with me at 415-730-4665 or [email protected] to see if you can take advantage of the current lower mortgage rates.
