Mortgage Rates Past, Present and Future – As Keith Renno stated in the Santa Clarita home loan update video, a year ago rates were at a historic low with interest rates for a conventional 30 year fixed loan at around 3.5%. Currently it’s 2017 and rates are still in the low 4’s, for the same conventional loan. Though not as low as a year ago, when it comes to a home loan, 4.5% is still a phenomenal rate. It’s still far below the 6.5% national average for interest rates here in the United States, based on the last 60 years!
NOTE for Prospective Home Buyers: If planning to buy a home it’s important to understand the difference between a loan pre-approval as opposed to loan pre qualification. If you want your purchase offer to be taken seriously, you’ll need to submit your offer with the proper pre approval documentation.
Mortgage Interest Rate Projections and how Increases Affect the Consumer
Keith states, according to the industry experts, rates are projected to reach the high 4’s to low 5’s by the end of the year. The question our prospective homebuyers always have is, what does this mean? How does a 1% jump in interest rates affect the prospective homebuyer or the current homeowner thinking about refinancing?
If considering buying a Santa Clarita home or refinancing an existing one, borrowers should consider a 1% jump in rates to equal an approximate 10% loss in borrowing power. This really is a significant number and we would advise consumers to move forward if even considering buying a home or refinancing.
As an example, say prospective homebuyer John has been thinking about buying a home, but is very busy with little time to devote. John has already pre-qualified for a conventional loan for up to 350K and has enough saved for a 20% down payment. When he prequalified rates were at 4%, but if he waits until the end of the year, rates could be at 5%. This could mean he will be limited to buying a home priced at about about $315,000 a opposed to the 350k he was originally qualified for. It only makes good financial sense, if you’ve got the funds for your downpayment, take advantage of the lower rates now available.
Santa Clarita Home Loan Update Conclusion
If you really want to be informed about local real estate our home loan updates can provide very powerful data. It works best if you compare monthly updates, then again annually. Remember, the real estate market historically repeats itself!
Please contact the team here at the Gregory Real Estate Group with any questions or if you need any help. Comments are welcome and we would love to hear your thoughts!
Thanks again to Keith Renno for this Santa Clarita Home Loan Update – The Renno Team.