Consumers benefit from historically low mortgage rates, but will interest rates remain so low? Read how you can benefit from 2% mortgage loans while it lasts. (iStock)
In recent years, mortgage rates have reached historic lows due to the ongoing coronavirus pandemic. In March 2020, the average rate for a thirty-year mortgage began to decline, and it continued to decline at the end of the year. In August, rates fell to below 3%, and in December 2020, it reached a low of 2.68%. Prior to the past year, the lowest recorded mortgage rate in 2012 was 3.35%.
With the low interest rate, questions around the housing market have become inevitable. Many experts predict that mortgage rates will rise to above 3% in 2021, but this will still be considered a very low rate. How can homebuyers take advantage of these historically low rates? You can visit an online mortgage broker like Credible to compare rates, choose your loan term and get pre-approved with multiple lenders.
Can 2% mortgage rates be the new normal?
The US economy is slowly recovering from the pandemic, which has left many wondering whether mortgage rates will remain low for the rest of 2021. Could the 2% mortgage rate be the new normal, or will interest rates rise as the economy starts? to bounce back?
Most market experts believe the unlikely rates will remain at 2% for the rest of the year. The rates are already starting to drop to 3% for various reasons. The Democrats in the House and Senate have indicated plans to take additional stimulus measures to improve the economy. If the economy continues to improve, the Fed could end current rate-cutting programs. The Fed’s decision affects mortgage rates and mortgage lenders. And mortgage rates could rise slightly due to inflation fears. In short: if you want to buy a new home – or refinance your mortgage – this may be the best time to get that lower mortgage payment.
When will mortgage rates rise?
According to Freddie Mac, the mortgage loan rate at 30 years is currently 3.02%. This is an increase of 2.65% in January. As you can see, the mortgage rate is starting to rise. But will low levels remain in the mortgage forecast?
It is impossible to know whether this record will remain low rates, and therefore homeowners should look for opportunities to exploit it while it lasts. If rates rise by a few percentage points, it may not seem like much, but it can add hundreds of dollars to your monthly mortgage payments.
Refinancing can be a great way to save money and shorten mortgage terms. Refinancing figures are hovering around record lows. Of course, this depends on your credit history and current mortgage rates. If you want to refinance, using a loan market like Credible can make the process easier.
Do I need to refinance my mortgage now?
Because mortgage rates are so low, homeowners can save thousands of dollars by refinancing. You can use an online refinancing computer to determine your new monthly costs and see how much you can save by refinancing.
There are many benefits to refinancing, including:
- Save money on your monthly payments
- Decrease the total amount you pay on interest during the duration of the loan
- Going from an adjustable interest rate (ARM) to a fixed interest rate bond
- Lower your mortgage terms so you can pay them off sooner
If you are interested in receiving pre-qualified rates without affecting your credit score, please visit Credible. After a short application process, Credible will show you competitive rates from multiple lenders so you can see if refinancing is the right option for you.
Homeowners Making a New Mortgage
Borrowers currently enjoy a 2% mortgage rate, so this is also an excellent time to consider refinancing. However, refinancing alone does not save you money – you need to choose the right money lender. Many homeowners assume that they need to refinance with a local bank or credit union, but this is not the only option to refinance your mortgage.
When you refinance, you are in fact replacing your current mortgage with a new loan. This means that you have to pay closing costs, which range between 3% and 6% of the total cost of the mortgage. Some money providers also charge a lot of fees, such as application fees, origination fees and penalties for prepayment.
If you are not careful, these fees can quickly add up to many of the cost-saving benefits of refinancing. The best way to explore your options is by visiting Credible to compare rates and money lenders.
The conclusion
The thirty-year mortgage rates are currently hovering around historical lows, but it may not stay that low forever. If you have been considering refinancing your mortgage, this is an excellent time to start the process. Do research and find out what kind of rates you can qualify for, and make sure you compare the offers of different money lenders.
Contact Credible to learn more about mortgage refinancing. You can contact experienced loan officers who can answer all your mortgage questions.