With rates at historic lows and costs continuing to decline, now may be the perfect time for prospective homebuyers to take advantage of this market and save on their mortgage.
Interest rates are a major factor to consider when shopping for a mortgage. This fall, they are significantly lower than they have been in recent years; according to the most recent data from the Mortgage Bankers Association, the average rate for a 30-year fixed mortgage is now 3.64%, the lowest it has been since September 2017. This means that buyers who qualify for a loan can lock in lower interest rates, potentially saving quite a bit of money over the course of the loan.
Another important factor to consider when buying a home is the cost of the loan. This includes not only upfront fees like closing costs, but also ongoing costs like private mortgage insurance (PMI). Closing costs often add thousands of dollars to the purchase of a home, and in many cases, PMI can tack on even more costs if the buyer puts down less than 20% on the home. This fall, however, there is good news on both fronts.
Closing costs are a complicated issue in the mortgage industry, as they are not regulated by the federal government. This means that lenders can charge whatever fees they believe are necessary to cover their costs, which varies from lender to lender. However, that doesn’t mean that buyers don’t have options - some lenders are now offering closing cost credits or even waiving them altogether. This could save buyers thousands of dollars in upfront costs, allowing them to put that money towards the down payment of the home.
On top of closing costs, buyers also need to consider the cost of PMI. Fortunately, the cost of PMI has decreased significantly over the past several years. According to the National Association of Insurance Commissioners, the average PMI premium is now 1.11%, down from 1.25% in 2018. This decrease in premiums could save buyers hundreds or even thousands of dollars over the course of the loan.
For homebuyers looking to buy a home this fall, there are several financial benefits to consider. Interest rates are at historic lows, giving buyers the opportunity to lock in a lower rate and save money over the course of the loan. Additionally, closing costs and PMI premiums have decreased significantly in recent years, meaning buyers can save money upfront and in the long term. Buyers should shop around and compare lenders to ensure they are getting the best deal possible. With the right mortgage, buyers can save money and become homeowners.
In summary, fall of 2019 is proving to be an outstanding time to purchase a home due to historically low interest rates, reductions in closing costs, and decreasing premiums for private mortgage insurance. Although interest rates have been steadily declining since 2018, the third quarter of 2019 has seen the sharpest drop in rates yet, making it an ideal time for prospective buyers to secure a loan and a home at a lower cost. In addition to the lower interest rates brought on by the market trend, some lenders are offering credits or even waiving closing costs, and private mortgage insurance premiums are also decreasing significantly. For those looking to purchase a home, fall 2019 is the perfect time to explore the savings available in the market, compare lenders, and make sure they are getting the best deal possible.
This article was contributed on Aug 19, 2023