The total loan balance that can be accessed at this rate is $548,250. Additionally, the tenant has to give the bank an initial down payment which is added to the loan and they make the combined total of the value of the property they want to buy.
This interest rate is the lowest in a long time, since in May of last year it was located at 3.28%. The rate on a 15-year loan, popular with those looking to refinance, also fell to 2.26% from 2.30% where it stood last week.
“Lowering rates helped the refinance ratio reach its highest level in eight weeks, driven by a 4 percent increase in conventional refinances,” Joel Kan, associate vice president for economic and industrial forecasting, told NBC.
“Additionally, refinance loan balances increased for the fourth week in a row, an indication that borrowers with higher balances acted to quickly take advantage of lower rates.”
Homebuyer mortgage demand increased just 1% during the week and was 13% higher than a year ago. The annual comparison has been skewed for several weeks, as the housing market came to a halt at the start of the pandemic in March 2020 and then came back strongly in June.
Experts expect mortgage rates to rise modestly in the short term, while remaining low in light of the Federal Reserve’s goal of keeping its key interest rate near zero until the economy finally recovers from the pandemic.
That is why it is essential to seek specialized support if you want to seize the moment and buy a property at the current low interest rates for the next 30 years.
Why is my mortgage interest rate important?
The interest rate on your mortgage affects the amount you pay each month, as well as the total interest costs you pay over the life of your loan. While it may not sound like much, a lower interest rate, even half a percentage, can save you significant amounts.
For example, a borrower with a good credit score and a 20 percent down payment who takes out a 30-year fixed-rate loan for $200,000 with an interest rate of 3% instead of 3.25% translates to almost $60. per month in savings – in the first five years, that’s a savings of $3,500.
In the same scenario, a one-half percent decrease in the interest rate means a savings of nearly $21,400 in total interest owed over the life of the loan.
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