Good news for buyers (and sellers) - 30 year mortgage rates are still low - they have been hovering around the 5% mark pretty much all year. Currently, the rate is just below 5% - which means you can buy a 30-year fixed mortgage of $600,000 for approximately $3,200 per month - that’s not bad. Basically, for every $100,000 worth of mortgage you pay a bit more than $500. Of course, there are fees involved - typically up to 1 point - or 1% which is paid to the mortgage broker for their services. Other fees include those for escrow and title services and those can add up to another 1% sometimes in fees. These mortgage fees are a write off on your taxable income (check with your accountant for specific scenarios.)
Last year at this time mortgages were averaging 6%. The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit. Rates on 30-year mortgages usually track yields on long-term government debt.
So, if you wanted to buy a house that cost $850,000 - and you had $250,000 to put down - you would need a $600,000 mortgage to consumate the deal. If you could get that 30-year fixed mortgage at 5% (see above example - your payment would be approximately $3,200 per month (+ taxes and insurance, of course) VS. that same mortgage at 6% or $3600 per month - as you can see there is a $400 difference every month or $4800 per year. That can make the difference between buying a house or not for some people. So this year vs. last year is all good for you if you’re a buyer - lower prices for the home you are buying along with a lower price for the mortgage as well!
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