There’s much more that goes into a great loan than just a low rate.
If you have an interest rate of 4% on your current home, it’s probably time to get in contact with your lender or give me a call so I can get you in the right direction for a refinance. Right now, the interest rates are at an all-time low, and they probably won’t be going much lower (though I know we’ve been saying that a lot this year only to be proven wrong time and time again).
Still, rates are now much lower than anyone could have imagined, so it’s always more likely that they’ll go up than continue to drop; no one knows what the future holds, but we do know that these current rates present an unprecedented opportunity. It’s really important for you to spend time talking with your lender so they better understand your needs and advise you on strategies that make the most sense.
A good lender will always talk to you about several different types of loans, but I strongly caution you against thinking that the lowest rate is always the best way to go. It’s a common mindset that I see people adopt, especially when shopping for internet loans, but it’s not always valid. Here are some of our recent example cases to prove it:
A $350,000 home had an interest rate of 2.785%, and the buyer had put down 3.5%. In the end, with mortgage insurance adding an extra $6,000 and a loan-specific fee of $239, the monthly payment for the first loan we looked at came out to $1,665 (tax and insurance not included).
The second loan we looked at had an interest rate of 3.25% and a 5% down payment (about $17,000), but required no mortgage insurance. There was a small fee of $63 added to the payment each month, but all in all, that monthly total came out to just $1,510 (tax and insurance not included).
So, counterintuitively, the loan with a rate of 3.25% ended up being more affordable than the loan with a rate of 2.875%. That difference of $155 is no small amount; what other bills could you pay with an extra $155 each month? The lowest interest rate doesn’t always equate to the best deal. You need a good agent and a top-notch lender to walk you through all of your options and highlight those key factors you may not be considering.
As always, if you have further questions about rates or any other real estate topic, don’t hesitate to reach out to me directly by phone or email. I’d love to help you.