This is for my good friend Mark! We were at a year-end get-together (aka Drinking beer at the pub) with my rowing crew and he kept reminding me that rates are dropping. Thank you Mark! As mortgage rates drop, so do housing payments. It’s a good time to consider refinancing your home, or making an offer on a new one. Mortgage payment affordability has never been so high in history.
According to Freddie Mac, the average 30-year fixed rate mortgage rate is now 3.94 percent — an all-time low — with an accompanying 0.8 discount points. This means to get access to the 3.94 percent rate, Sacramento homeowners and home buyers should expect to pay a loan fee equal to 0.8% of the borrowed amount, plus “normal” closing costs.
In addition, if you are in need of a low down payment option, FHA is now at 3.75% on a 30-year fixed rate with an accompanying .5 discount points.
Mortgage rates in California have been in decline for most of the year. Since peaking in early February, the average home owner’s principal + interest payment on a 30-year fixed rate mortgage had now dropped by 12.2 percent.
Here is how mortgage payments compare, then and now, not accounting for your individual tax-and-insurance escrow :
- February 10, 2011 : Payment of $539.88 per $100,000 borrowed
- December 15, 2011 : Payment of $473.96 per $100,000 borrowed
For existing homeowners, the dramatic drop in payments is reason to reach out to your loan officer. A refinance could save you tens of thousands of dollars over the life of your loan — especially if you chose to refinance your mortgage into a 15-year program.
The 15-year mortgage, says Freddie Mac, is also at an all-time low, registering 3.21 percent with 0.8 discount points, on average.
For home buyers, today’s low rates present an interesting opportunity.
Mortgage rates are the key factor in determining your monthly housing payment so, with average mortgage rates below 4 percent, it’s no wonder home affordability is cresting. However, the housing market is showing signs of recovery. Home supplies are dwindling, buyer demand is rising, and the economy appears to be mending.
Home prices are expected to rise in 2012 and, as they do, they’ll take housing payments with them. The best time to buy a home may be now; before the recovery completes.