By York Van Nixon III
Whether you are thinking about buying a home or refinancing your existing mortgage, now is the time to do it.
On Thursday, Washington area Freddie Mac (one of the two behemoth secondary market GSEs) released data putting 30-year fixed mortgage rates at 4.15 percent (0.70 points paid at closing). This recent drop of 17 basis-points puts the cost of homeownership at a 50-year low. For those who want a shorter time frame and have the resources to make the higher payment, a 15-year fixed rate is available at 3.36 percent (0.60 points paid at closing).
In addition to rates posted by Freddie Mac, many area lenders are offering rates that are considerably lower. While your payment may be less compared to those offered by some national banks, expect to pay higher origination and discount points. Depending on how you file your taxes, points may be deductable.
There are many online services like Bankrate.Com where you can compare rates without making an application. If you prefer a friendly face, simply drop by your local bank. Before you do, heed one word of caution: Although most major lending institutions are flush with cash, they are only approving loans to individuals with stellar credit scores (720 and higher). If this is not you, then consider a FHA loan. Their minimum score is 620. The FHA 30-year rate is only 3.75 percent, but the APR is 4.302 percent. Those with small savings and thinking about buying a home, FHA only requires a 3.5 percent down-payment compared to what most conventional lenders want – 20 percent or more.
With rumors of a double-dip recession, there is the possibility home values may further erode. While the worst case scenario could happen, the likelihood of substantial price slippage in Washington markets is remote.
There are some neighborhoods in our city still pressured by short sales and foreclosures. Contact an experienced agent or appraiser to find markets still realizing year-over-year appreciation.
Do your homework before signing anything. Understanding real estate is not rocket science.
Comments