May 11, 2020
For those new to the real estate market or those that have not been tuned into how the COVID-19 pandemic has impacted the value of your mortgage, you may not understand that just a 1% mortgage rate change can make a huge difference over the course of your loan.
I encourage you to share this article with your friends and associates who can benefit from this information and the links that it provides. And I’d love to hear from you if you’d like to discuss or have any questions.
While it is arguably the smallest number in the sea of numbers a home buyer/owner needs to assess, it is also the absolute most important number to consider right now.
For while the Federal Reserve does not set mortgage rates, it does affect banks, and banks can pass those reductions on to the consumer. The standards set by the Fed help banks decide what prices to use when navigating bank-to-bank lending. Typically banks and other lenders lower their interest rates to more accurately reflect the Fed rate. In turn, lenders lower their rates to attract more consumers.
The interest rate will affect your monthly mortgage payment and the total amount you pay for your home. With mandatory quarantines and business closures in response to COVID-19, the Federal Reserve dropped their interest rates to encourage spending. See at https://www.foxbusiness.com/…/fed-rate-cuts-mortgages-benef…
In the last several weeks, interest rates have hit record lows. As of the time of this writing, May 9, 2020, the interest rate on a 15-year fixed mortgage in California is just 3.31%
If you are currently a homeowner and are in the position to refinance your home, taking advantage of lower interest rates (even if it’s just a single percentage point) could save you thousands of dollars. If you have a fixed-rate mortgage, you won’t see any changes unless you opt to refinance your home loan. If you have an adjustable-rate mortgage (ARM), your monthly payments will typically go down.
If you want numbers specific to your home purchase, you can use an online mortgage calculator to customize your costs. https://www.mortgagecalculator.org/
To consider the costs of refinancing, read this: https://www.foxbusiness.com/…/mortgage-rates-record-low-ref…
Consumers should note that following these emergency cuts, prices have fluctuated, and many lenders have seen an influx of applications. The increased interest in loans and refinancing could make it more difficult to apply or increase your waiting period before approval.
I look forward to hearing from you! Tracy Curtis, Coldwell Banker Real Estate
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