Mortgage rates, though seemingly small in scale, pack quite the punch and they are vital when it comes to financing a big expenditure like buying a house. When hundreds of thousands of dollars are in the mix, those pesky percentages can add up to incredible amounts of interest paid. That is, money not spent on your real estate investment, but paid directly to the company loaning you the money. So, when you’re in the process of signing a contract devoting the next thirty years of your life to a monthly payment, the agreed-upon mortgage rate should be at the forefront of your mind. Similar to every other aspect of the economy, mortgage trends are proving to be susceptible to the effects of COVID-19, and in an unprecedented way. For potential home buyers though, this historical year may be the best time to buy a home, based on mortgage rates predictions. While buying or refinancing a home might be low on your pandemic priority list, here are a few reasons why 2020 may, in fact, be the best year to buy.
Mortgage Rates Predictions
Just last year, though it may seem like decades ago at this point, mortgages rates remained fairly steady at 4.24% APR. Not so in 2020. This year alone, mortgage rates have hit the “record low” status for the eighth time, and it’s only August! In June, rates had dropped to an average of 3.35% APR and are expected to continue trending downward, settling at an average around 3% APR in 2020’s last quarter.
These low-interest rates not only signal a lower monthly payment, but lower overall interest paid as well. Let’s crunch some numbers:
Let’s say you purchase a house for $300,000 with a down payment of $60,000. With your financed amount of $240,000 at last year’s interest rate of 4.24% APR, your monthly payment comes out to about $1,462.58 with a total of $184,530.41 paid in interest over the life of the loan. In 2020, that same house with the lower 3.35% APR, ends up with a monthly payment of $1,341.05, a savings of over $120 a month. The real kicker? The total amount of interest paid drops significantly to $140,776.49. That’s a total savings of over $40,000.
A Home Loan Professional is Key
Navigating the convoluted world of home financing is no easy endeavor. Throw in a global pandemic, and the idea of purchasing a new home sounds too risky (with or without a mask). But with interest rates at landmark lows, the reward of saving tens of thousands of dollars is too good to pass up.
The key to getting the best deal when buying a house? Contact a home loan professional who will work for you to get the best interest rate and ensure your real estate investment is the deal of a lifetime. Karen Douglas, the “Mortgage Genie” can help you with all your home loan needs. Her extensive experience is exactly what the doctor ordered when it comes to purchasing a home. Make sure your face and your home buying needs are covered in 2020. Contact her today at (925) 648-0981!