March 3, 2020
There are times when mortgage rates are low due to any number of factors. And then there are situations where rates fall so low that even people in the mortgage industry start reviewing their refinance options. Now is one of those times with mortgage rates for FHA and VA loans falling below the three percent threshold into the high two percent range.
FHA loan and refinance loan rates, at these numbers, promise a more affordable home loan and they provide the most benefit for those who plan to keep their home for a long time and pay a significant portion of the mortgage (if not the whole thing).
Those who want to buy and sell quickly won’t reap the same long-term financial benefits as those who buy and keep the property. Low interest rates provide more advantages the longer you pay on the loan in the form of a less expensive mortgage.
The two biggest factors in your mortgage loan payment, principal and interest, can be broken down so that you see over the lifetime of the mortgage or refinance loan how much you pay for principal (the amount of the loan you applied for) and interest on that principal amount multiplied over the term of the loan.
You can ask a lender to break down how much the loan will cost you in interest charges based on an interest rate you qualify for based on your FICO scores and other financial qualifications.
When there are times of incredibly low mortgage rates (like right now), people who need the savings such low rated can provide will start reviewing their options.
But sometimes they forget that FICO scores and other credit report data can affect the rate you get offered by the lender. The sub-three percent home loan rates you see advertised online may be open to you IF you financially qualify.
But today’s low rates mean lower rates in general, so even if you can’t qualify for the very best loan rate, you are sure to get a better deal than in times when rates are higher.
When there is bad economic news or even bad news in general, investors begin redirecting their money into less risky ventures such as Treasury Bills.
Investor behavior affects mortgage rates. And with the COVID-19 coronavirus headlines pouring in from all over the world (and not just one portion of it), rates have moved to unprecedented lows. However, the rates you find today are not guaranteed to be the same tomorrow, hence the need for you and the lender to negotiate a rate lock commitment.
For some applicants, now may be the very best mortgage rate situation to apply in; we might not see rates this low again without an accompanying crisis like the coronavirus or some other circumstance to motivate it.
For probably a very limited time, we see a once-in-a-lifetime opportunity to get a loan with rates at or below 3% (to the most well-qualified borrowers, your experience may vary).
But for those not quite ready to apply for a loan today, tomorrow, or next week, the low rates we see now won’t help you. Timing is everything in situations like these, but for those who weren’t able to commit, it’s pointless to worry about what might have been. Don’t rush into a major financial commitment if you are not ready.
At the time of this writing, mortgage loan interest rates were reported, best execution, as follows:
- 30-Year Fixed-Rate Conventional Mortgages: between 3.125 & 3.25%
- FHA and VA Mortgages: 2875%
These rates assume ideal conditions and may not be offered to all applicants. Your experience may vary depending on FICO scores and other financial qualifications. No guarantees are implied.
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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