By Rae Oakley, Flyhomes Mortgage
If checking bond prices isn’t a part of your morning routine (as it is mine!), then you might not know how good interest rates look right now. We’ve got you covered. Interest rates have fallen almost an entire percentage point since early November. While that might sound attractive without much more context, let’s put it into perspective.
Take a single family home in Seattle for example. The median home price here is about $726,000. Assuming you bought your home last fall, you probably secured a mortgage at an interest rate of about 4.875%. Now, with this same scenario, you would be looking at an interest rate below 4%!
Mortgage-speak aside, what does that actually mean? The answer is … monthly savings. In the scenario above, reducing your interest rate by about 1% means over $300 in monthly savings.
Here’s a closer look at a couple of scenarios across various down payments:
You might wonder why the savings increase as the down payment decreases. The lower your down payment, the higher your loan amount … and therefore the amount of interest you owe on that amount. So when interest rates swing downward, your savings are greater. In other words, the higher your loan amount, the greater the savings!
The best news is that you don’t have to buy another house to realize these savings. With such a large dip in interest rates, you might be able to refinance your mortgage at no cost while still saving hundreds of dollars off of your monthly mortgage payments.
Our rule of thumb at Flyhomes Mortgage is that you should save at least 0.25% off of your current interest rate for a refinance to make sense. We also made a Beginner’s Guide to Refinancing for those looking for all of the details.
Want to talk about refinancing?