The Honest Broker: Market Watch
It was reported this week that mortgage rates have hit a 3 year low….
Government Mortgage rates for 30 years and 15 years, plus the variable rate are being reported at:
*30-year fixed-rate mortgage averaged 3.45 % with an average 0.7 point for the week ending February 6, 2020, down from last week when it averaged 3.51 %. A year ago at this time, the 30-year FRM averaged 4.41%.
*15-year fixed-rate mortgage averaged 2.97% with an average 0.7 point, down from last week when it averaged 3.00%. A year ago at this time, the 15-year FRM averaged 3.84%.
*5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.32% this week.
How do the current mortgage rates affect current homeowners?
If the homeowner is happy in the home, intends to stay for at least 10 more years, but currently paying a higher rate, this may be the time to consider refinancing to the lower rates being offered. The “rule of thumb” to consider refinancing is if you can reduce your current mortgage by at the very least 1%. You should not refinance if your interest rate will not drop by at least a point and if you possible by 2%.
The other rule of thumb is the “break even” rule. If leaving the home before you break even with all the costs associated with refinancing, it would be inadvisable. The things that should be taken under consideration are the fees associated with refinancing because the homeowner is applying for a whole new mortgage.
These fees can include some, possibly all of the following: application fee, appraisal fee, closing agent or attorney fee, notary fee, points, prepaid interest, private mortgage insurance and title insurance, and a title search. Finally, the “clock” so to speak, restarts for the length of your loan.
Does refinancing make financial sense in the long-run? It may be if the goal is only to reduce your current monthly payment.
Of course, both buyers and sellers experience great benefits with these lower mortgage rates. Buyers, including current renters, who couldn’t qualify for a mortgage before, are now possibly able to qualify now and can enter the market for the very first time. Sellers, who were on the fence regarding making a change from their present home by moving “up” or downsizing, see this as a time of opportunity to sell and carry through on their plans. Whether a buyer or a seller, the market is very active due to rates being low.
Diane Lott, Broker
Paradise Found Realty, Inc. of Palm City
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