As anyone who has tried to buy a home or apply for a loan can tell you, a tiny change in interest rate can lead to big changes in the amount the borrower pays to the lender. Interest rates and mortgage rate in the U.S. have been at historic lows for over a decade, but that period is coming to an end. This means that people who want to buy a home or refinance their current loan should do it now, when they can get the best terms and interest rate.
When the last recession began in 2008, the Federal Reserve set interest rates to historically low levels to make lending as easy as possible for banks. The recession officially ended years ago, and interest rates have been slowly rising since then. Since rates were so set so low during the recession, the rising rates didn’t significantly impact mortgage rates at first and it was still a great market for borrowers, such as home buyers. However, there is growing concern that mortgage rates will follow the rise in federal interest rates, and now could be the last chance to enjoy loans at such low rates.
The federal interest rate doesn’t directly affect the mortgage rate, but it does affect the price banks pay for other important transactions. Banks often pass these higher costs onto the customers and that’s why rising federal interest rates can lead to higher mortgage rates. There are other factors at play, but rising federal interest rates will eventually lead to higher mortgage rates. Locking in a loan now at a low interest rate can save you thousands of dollars in the end. Recent data from the Mortgage Banker Association found that mortgage rates had already increased slightly in January 2019.
Minor fluctuations in interest rates can have tangible effects on the amount the borrower pays for their new home. One mortgage researcher gave the example of a $200,000 30-year mortgage at a 4 percent interest rate. Using a mortgage calculator, the researcher determined that a 1 percent increase in the rate would raise the monthly payment by $119. Taking advantage of the low mortgage rates now can save you a lot of money in the future.
No matter what kind of loan you want to get, A1 Mortgage can help you get the money you need at the best rates. We have many kinds of loan types, such as conventional loans, VA loans, FHA loans, USDA loans and more. We also have a The Freedom Loan, an exclusive to A1 Mortgage, where you can pay your home off in less than 10 years, all without changing your spending habits. We help you pay your principal first so you can save thousands in interest!
Now is also a good time to consider refinancing a loan, which is something else A1 Mortgage can help you do. We can take a look at the current terms of your loan and see if we can find you a better deal with lower rates. This is another situation where rising interest rates will lessen the amount borrowers can save by refinancing their loan.
If you want to take advantage of low interest rates and low mortgage rates, now is the time to make that happen. A1 Mortgage can help you get a loan for your dream home or to fund an expansion to your current home. We can also help borrowers refinance their loan so they can get better rates and save money from the original deal. You can visit our website and use the apply form to get started. You can also use the live chat or the contact form to ask a question.