According to recent survey data from the National Association of Realtors, purchasing a home remains part of the “American Dream.” Homeownership is still an attractive opportunity for financial security, stability, and investment for you and your family.
If owning a home is a dream of yours, it may be easier to achieve than you might think. Mortgage rates on 30-year fixed mortgages reached a historic low of 2.81% last year, potential homebuyers are wondering if the low rate trend will continue, or if interest rates will start to rise. Despite the uncertainty of 2020, the housing market should remain strong and stable throughout 2021.
According to Freddie Mac’s quarterly forecast, the average 30-year fixed-rate mortgage hit a record low more than a dozen times in 2020. The low interest rates are projected to continue throughout the year, with interest rates averaging below three percent. While this is slightly higher than the 2020 averages, rates should continue to stay low thanks to the Federal Reserve voting to keep interest rates anchored near zero.
Low mortgage interest rates create an outstanding opportunity for potential homebuyers in the current housing market. Here are a few reasons why every homebuyer should take advantage of these low rates:
- Save Money. Homebuyers can save thousands of dollars over the life of a mortgage loan. For example, you put in an offer for a home with a purchase price of $200,000. If your 30-year fixed mortgage rate is 4%, your monthly payment would be about $955, but if your interest rate is 3%, the payment falls to $843 per month. With amortization calculated in, a homeowner will save $30,000 over the life of the loan at a lower rate.
- Affordability. Lower interest rates help to create lower monthly payments, which make purchasing a home more affordable. According to Black Knight, a mortgage software and analytics company, it takes 22% of the median household income ($68,400) to buy an average-priced home, which is about $320.000. The long-term average is 25.1%, making now a great time to enter the buyer’s market.
- More Buying Power. With a lower mortgage payment due to lower interest rates, potential homebuyers can qualify for a larger home loan with the added savings. Let’s say you can afford a monthly house payment of $2,000 and put 20% down. With a 3% interest rate on a 30-year fixed mortgage, you could purchase a home for about $485,000. But, if your rate was 4%, the purchase price decreases to about $436,000. A 1% difference in interest rate may not seem like a lot, but it can make a huge difference in your potential buying power.
As the economy gets stronger and recovers post-pandemic, it’s natural for rates to rise in response to a healthier economy. According to First American, rising interest rates can reduce home-buying power and affordability, but higher rates also correlate with a strong economy, thus increasing homebuyer demand. By historic standards, mortgage rates will remain at record lows, continue to boost home-buying power and keep purchase demand strong.
If you’re ready to buy or refinance a home, now is the time to make your move before mortgage rates begin to rise. The experienced professionals at Pacor Mortgage can answer your questions and help you take advantage of today’s great mortgage rates. Call us today at 773-881-7744 to set up an appointment, or visit our website to learn more about our products and programs.
2021 Pacor Mortgage Corp. Pacor Mortgage Corp is located at 14930 Cicero Ave, Oak Forest, IL 60452, Phone 773-881-7744 (Unique Identifier #120945). For Licensing information, go to: www.nmlsconsumeraccess.org. Pacor Mortgage Corp is an equal housing lender and is licensed by the Secretary of State under the Illinois Residential Mortgage Lending Act and is assigned Illinois Residential Mortgage License MB.0000892. Pacor Mortgage Corp branches operate with the following licenses and is assigned Illinois Residential Mortgage License MB.0000892-001, with a Wisconsin License # 260345BA, Palos Heights NMLS 261297 and is assigned Illinois Residential Mortgage License MB.0000892-008, Colorado, Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, California license # 41DBO-67516, Florida MLD1075, Indiana DFI 13177, Maryland 23528, Michigan FL0828, Michigan SR1130, Minnesota MN-MO-120945, North Carolina L-184546, Ohio RM.804151.000, Pennsylvania 43855, South Carolina, MLS – 120945, Wisconsin 120945BA, Kalamazoo, MI NMLS 120945 also DBA Lake Pacor Home Mortgage. This is not an offer for an extension of credit, a rate lock or a commitment to lend. All loans must satisfy company underwriting guidelines and any investor overlays. Any of the advertised products may be discontinued at any time. Information and pricing are subject to change at any time and without notice. Loans are being committed and closed at expressed rates although these rates change and may not be available at time of your lock in, commitment and / or closing. Pacor Mortgage Corp is not affiliated with your current lender, nor is it an agency or extension of the Federal Government, Fannie Mae, Freddie Mac or HUD.