Low Mortgage Rate
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A Low Mortgage Rate Drives The Housing Market Boom
It is estimated that the sales of existing and new homes will reach a record 6.55million in 2004. But what is driving this complete boom in house purchasing? With 68% of the American population now owning their own home, one of the greatest contributors to the housing boom has been the low mortgage rate being offered by mortgage lenders.
Mortgage rates have really hit an all time low in the last five years. Even though we have seen slight increases this year, 6.0% is still an incredibly low mortgage rate. Low mortgage rates make monthly repayments more affordable as lenders are charging less to loan the money. Also, a low mortgage rate means that we can afford to purchase more expensive homes, as the interest payments are lower per month than if the interest rate was higher.
This is fortunate, because as demand has increased for houses, so has the price. In some areas prices have more than doubled. For example, in 2001 the median house price in West Palm Beach Fla was $139,400, in 2004 its $267,000 !
How do I obtain a low mortgage rate?
If you are a first time buyer you need to spend your time shopping around for a low mortgage rate to find the best deal for you. You will find a range of banks, credit unions and specialist lenders who may be able to offer you an attractively low mortgage rate.
If you already have a mortgage it could be beneficial to take out a refinance mortgage. You need to determine if switching your mortgage to a lower mortgage rate will be beneficial for you, especially if you have held your mortgage for a number of years. You could end up paying more in interest in the long run if you don't investigate it thoroughly.
Also if you have suffered from bad credit that has affected your credit score, you may find that you will not be eligible for these low mortgage rate offers.
As with all attractive offers that we are bombarded with daily, some low mortgage rate offers will have a catch. Make sure you pay close attention to the terms and conditions. You may find that they will have high application costs or closing costs that are not included within the mortgage interest rate. All associated fees and expenses should be taken into consideration before making the decision as to whether the low mortgage rate offer is worthwhile.
It is also important to not overstretch yourself too. A low mortgage rate at present may mean that you can afford to buy a house that you thought was beyond your reach. But if interest rates increase and you have an adjustable rate mortgage, would you be able to pay the extra interest payments? Be fully prepared and budget for any eventuality.