30-year fixed rates fell to historic lows last week. But will that continue in this crazy marketplace?
Last week, Freddie Mac announced their historic rate drop which brought 30-year fixed rates to an all-time low of 2.98%. This is the lowest ever recorded in their history. But we have seen consumer mortgage rates do some interesting acrobatics lately, leaving many homeowners and potential borrowers feeling somewhat vulnerable.
Should you buy a home? Should you refinance? Will those rates remain in effect until you can get to the other side of the loan process?
It’s certainly hard to tell. Especially since Freddie Mac is seeing an influx in new mortgage applications, with borrowers hoping to take advantage of these current rates. When this happened a few months ago, lenders became log-jammed and, consequently, increased their rates. But here are some things that a borrower should keep in mind.
You Can Lock in a Rate
This is a bit of a risk, depending on whether you think rates will increase or decrease. But at these record-breaking rates, locking in a rate protects you in case the lenders become overwhelmed again.
Even if rates do go a bit lower (really, how low can they possibly go from here?) these current rates are unprecedented. If you have maintained employment and financial stability through this time and are qualifiable, this is probably the time to strike, either for a new home purchase or a refinance.
Your Rate Could Even Be Better Than This
Don Burns with H.O.M.E. Lending shared, “Rates are dependent on borrower strength. This 2.98% is an average. Consequently, if you are in a strong position right now, it’s even possible to get a lower rate than this. It’s worth a quick call to your loca mortgage broker to understand where you may be on the rate continuum.“
Refinancing to Weather Potential Storms
If you have equity in your home and feel at all insecure about the current state of our economy, a cash-out refinance may be risk-protection for you and your family. Remember, once a job loss or inability to pay household payments hits, it then becomes almost impossible to get approved for a mortgage.
Taking a good look at your equity and the consequences of refinancing may take a huge psychological load off your shoulders. Refinancing should always be considered from all financial vantage points but in these strange times, having the availability of liquid equity can make a huge difference to your peace of mind.
Will Rates Stay Low?
It depends. Like we mentioned earlier, with the increase in demand (according to the Mortgage Bankers Association, refinance applications were up 111%), lenders may take the previous strategy of increasing rates to offset that. It is a simple matter of supply and demand.
We also understand that these times are continually changing. Under the CARES act, the government has offered a safety net against foreclosures. Depending on what is in store for us economically in the near future, these protections may end which puts lenders more at risk and may also lead to higher interest rates.
H.O.M.E. Lending is Your Stockton Mortgage Broker
If you are considering purchasing a new home or refinancing your current home, Their advice would be not to wait. Professional Stockton mortgage brokers at H.O.M.E. Lending are here to help you make the right decisions for yourself and your family.
H.O.M.E. Lending provides professional mortgage services throughout the state of California and would be glad to answer any of your questions and provide you with a free prequalification. Call their professional team of mortgage brokers at (209) 477-0262.