So Just What Do Low Rates Mean for You?

So rates are low. I'm sure you've heard that by now! Rates are below 5%, lower than they have been in at least the last 30 years says Freddie Mac in an article they released yesterday. But what does that mean to you?

Well, it could mean that now is a good time for you to refinance. I may mean that now is a good time for you to move. And, I may take some heat for saying this, but it may mean nothing at all to you.

If you plan on owning you current home for several more years and if your current interest rate is 2 percentage points higher than today's rate AND if your credit scores are very good, then it might be a good time refinance. You are going to have to pay to refinance so you'll want to know that you will own this home for some time to recoup the closing costs of the refinance in the savings you have each month on your payment. So don't run out and refinance if you plan on selling within the next year! Also, you want there to be a reasonable savings between your current rate and the new one. 2 points is the general rule, but you can do your own figuring to see if a 1.5% savings on your rate is worth it to you. Finally, the rate that you will see quoted by agents, lenders, etc. tends to be the best rate available and applies to people with 720+ credit scores. If you credit is only average, say 680 or 650 then your rate will be higher, and thereby not as much of a savings on your monthly payment.

If you were planning to move in the near future, the low rates may mean that it's time to move up your timeframe to move so that you may take advantage of the lowest rates available. Even if your credit scores aren't perfect, you will still get a lower rate today. You may or may not get the "best" rate. The point is that the rate starts off so good today that even if the lender has to add to the rate because this is an investment property for you or because your score isn't perfect or because you are buying a condo, it's still better than starting off with a higher rate and adding to it.

Today's rate that I've received from Hancock Bank is 4.75% for a 30 year fixed rate conventional loan. I'm providing you with a mortgage calculator below so that you can start your own calculations.