In the olden days, rates were rates. Today it’s more complicated.
I got a rate sheet today from a Lender I’ve worked with before. It lists mortgage rates from 5.561% to 7.093% in a total of 22 different scenarios.
I will explain the big range and whys at the bottom of this post.
However, remember this: If rates go DOWN you normally can choose to refinance. Some lenders off a no or very low cost refi if they are done in few year time window. AND… If rates go UP you’ll be happy you bought when they were lower.
If rates DO go DOWN, prices will likely go UP as more buyers can buy, sucking up the inventory and going back to Buyers paying over market to “Get that Rate”... so waiting until rates go down (if they do) may not save you any money.
For example: Get a 30 year $250K loan today at 6.75% and your P&I is $1,622/mo. If rates go to 5.75% but the home goes up $25K you’re getting a $275K loan at 5.75% and your payment is $1,605. Not much different and you lost that savings by renting longer anyway.
If you refinanced your $250K loan instead (assuming you paid nearly $0 off) when rates fell… your payment would go down to $1,458.94. What REALLY saved money was buying at today’s prices and rate…. and refinancing later to a lower rate IF they go down at yesterday’s prices. In addition, if prices went up that $25K YOU are the one that got that equity boost (like money in the bank of your house) vs the prior owner you waited to buy from.
So IF you CAN buy, it may be the right time.
MORE inventory this spring means more choices and more room for negotiations. Give serious thought to this and what it means to you.
And now, as promised, what factors went into that big rate range?
- FICO scores. If your score is over 740 your rate is better. 680 and below get the worst rates.
- Down payment. If you put down 20%+ your rate is better IF it’s a conventional loan.
- Different rates for Conventional, VA, FHA, USDA, JUMBO loans.
- 15 yr vs 30 year loans. 15 year rate is better, but not as significantly as I’ve seen in the past.
- This lender shows both the low and the high in 6 different types of loans over the last 30 days.
