Mortgage News, Mortgage Rates

Mortgage Rates Hit Rock-Bottom Again, But For How Long?

May 11, 2012 by · 2 Comments 

House Market Isolated by ayzek | iStockphoto.comConforming mortgage rates continue to drop. For the second straight week, the 30-year fixed rate mortgage fell to a new, all-time low nationwide.

According to Freddie Mac’s weekly mortgage rate survey, the average 30-year fixed rate mortgage rate dropped 1 basis point to 3.83% this week for borrowers willing to pay 0.7 discount points plus a full set of closing costs.

The 15-year fixed rate mortgage also set a mortgage rate record at 3.05% with an accompanying 0.7 discount plus closing costs.

Click here to see today’s mortgage rates.

Discount points are a one-time, up-front closing cost, based on loan size. 0.7 discount points is equal to 0.7% of the borrowed amount. A home buyer in Valparaiso Indiana opening a $200,000 mortgage and paying 0.7 discount points, therefore, would be subject to a one-time $1,400 fee paid at closing.

Borrowers wanting to avoid paying discount points can expect higher mortgage rates than Freddie Mac’s reported national average.

Falling mortgage rates are nothing new throughout Indiana. Since peaking in February 2011, mortgage rates of all types have been in steady decline. The 30-year fixed rate mortgage has shed 122 basis points since that date, falling from 5.05%; the 15-year fixed rate mortgage has shed 124 basis points, falling from 4.29%.

Low mortgage rates give today’s home buyers additional purchasing power, stretching home affordability to new heights in Northwest Indiana and suburbs of Chicago Illinois.

Click here to see today’s mortgage rates.

Low rates also help existing homeowners to lower monthly mortgage payments. For example, as compared to mortgage rates just 15 months ago, homeowners refinancing into today’s 30-year fixed rate mortgage stand to save 13.4 percent on their respective mortgage payments.

Mortgage rates

Click here to see today’s mortgage rates.

A comparison of potential monthly home loan savings from February 2011 to May 2012:

  • February 2011: $539.88 principal + interest per $100,000 borrowed
  • May 2012: $467.67 principal + interest per $100,000 borrowed

A homeowner with a $300,000 mortgage at February 2011 30-year fixed rate mortgage rates would save $2,600 annually with a refinance to this week’s low rates. Even accounting for discount points and closing costs, the “break-even point” on savings like that comes relatively quickly.

Mortgage rates can’t be predicted so there’s no guarantee of low rates forever. If today’s rates meet your budget, consider locking something in. Speak with a qualified mortgage professionl about your loan options.

Click here to see today’s mortgage rates.

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James K Barath, CMPS®

James K Barath is a Certified Mortgage Planning Specialist®, Certified FICO® Professional, Certified Military Housing Specialist® and your FHA Home Loan Expert. He is also a graduate of Purdue University, The CMPS Institute, Dale Carnegie Human Relations Course & Napoleon Hill Foundation's PMA Science of Success Class. It's your home and your future. It's his profession and his passion. He is ready to work for your best interest. Contact James for your FREE Home Loan Approval !  His Motto: I Facilitate the American Dream Through Responsible Mortgage Lending and Financial Literacy!

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2 Responses to “Mortgage Rates Hit Rock-Bottom Again, But For How Long?”
  1. Are the lower rates really providing extra purchasing power anymore? I mean, if the rates go back up a little – are the discount points going to drop, stay the same, or rise? It sounds like a lot of people are getting into mortgages with great rates, but if they don’t have a huge down payment – they may actually end up saving very little given the closing costs.

  2. David – You are correct that home buyers are becoming numb to the headlines of historic-low mortgage rates. It is also questionable for some that may have already owned homes whether home affordability is improving. You must remember that there still is a segment of the population that have never owned and this could ultimately be there chance to achieve their dream of homeownership. With that being said, keep spreading the word as there is always an audience.

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