Mortgage rates have plummeted since the beginning of the year to the lowest average since 2016 as a result of market movements in response to the coronavirus. In addition, the Fed recently made the rare move to lower the federal funds rate by a half-point to a range of 1% to 1.25% in between its regularly scheduled meetings noting that the move was in response to the “evolving risks” the COVID-19 coronavirus outbreak poses to the economy.
According to NerdWallet, this is is good news for those with or shopping for adjustable-rate mortgages and home equity lines of credit, which are directly guided by Fed rate cuts. ARMs will likely see lower rates at their next reset period, and HELOCs could fall half a percentage point in the next billing cycle or two.
Buying a Home
If you are in the market to buy a home this spring season, you may face competition from other buyers because there aren't enough homes for sale to meet demand. Because of this, lower mortgage rates and affordability aren't necessarily the biggest challenges in today's housing market as much as a lack of inventory is. However with a mortgage preapproval, flexible closing date and limited contingencies, we can help you prevail in what is soon to be a hot housing market.
Whether or not it makes sense to refinance can depend on a lot of factors, including what rate you currently pay and how long you plan to stay in your home. But one rule of thumb is that you should consider refinancing if you can lower your interest rate by at least half a percentage point.
Here’s how the math looks according to Money Magazine: For a homeowner with a typical $250,000 30-year mortgage, cutting the interest rate from 4% to 3.5% — roughly in line with today’s average rates — would save just over $70 a month, according the mortgage calculator at ConsumersAdvocate.org, MONEY’s sister site. If the mortgage started at 5%, the savings would be nearly $220 a month. If you purchased your home using an FHA loan, now would also be a great time to consider refinancing into a conventional loan to get rid of PMI if you have over 20% equity in your home.
Looking to refinance or finance your dream home in Atlanta? Our team of preferred lenders and I are here to help! Reach out to us today and we will get you in touch with our team of preferred lenders.