Last Updated on December 30, 2020 by Maggie Sutton
In 2020, mortgage interest rates dropped to an all-time low and went under three percent for the first time ever. In fact, the mortgage interest rate dropped 14 times in 2020. This was in response to the global coronavirus pandemic, after rates had been declining for years prior. The Federal Reserve, who is responsible for influencing interest rates, has said that rates will remain low, potentially for several years. With these historic low rates, now is an excellent time to consider buying or refinancing your home.
Lowest Mortgage Interest Rates in Years
So, just how good are these mortgage interest rates? Well, according to mortgage giant Freddie Mac, the average rate on a 30-year fixed-rate mortgage (FRM) as of December 2020 is 2.71%. That’s the lowest since Freddie Mac was started in 1971, according to Mortgage News Daily. For a 15-year FRM, the average rate is 2.26%. For a 5/1 adjustable-rate mortgage (ARM), the average rate is 2.79%.
The impact of these low rates for home owners looking to refinance could be significant. Because home prices have also skyrocketed in 2020, your equity could also have skyrocketed. By refinancing, you could potentially eliminate PMI if you put less than 20% down. Or, if you have an FHA loan, you could replace it with a conventional loan. According to Black Knight Data & Analytics President Ben Graboske,
“Some 2.7 million homeowners refinanced their first-lien mortgages in the third quarter, bringing the total through September 2020 to 6.4 million…. And, with rates continuing to sit at record lows, refinance incentive remains at historic highs. As of the last week of November, 19.4 million 30-year mortgage holders could likely both qualify for and benefit from a refinance.”
Who wouldn’t want to save percentage points on their mortgage interest rate? If you’re one of those 19.4 million home owners, now may be the perfect time. Let Homes for Heroes connect you with a lender for no obligation to see what options you have.
How Long Will These Rates Last?
Even in the best of conditions, mortgage interest rates change all the time. With the announcement of several COVID-19 vaccines and the unemployment rate declining every month since May 2020, one might think that mortgage interest rates and other rates would start to increase. However, the Federal Reserve has adjusted their financial plan, and it could be years before we see mortgage interest rates rise again.
The only thing that’s for certain is that refinancing rates are low right now. If you’ve been thinking about refinancing your home, now may be the time to do it.
Comparison Shop for the Best Rate
Mortgage interest rates generally follow the rates set by the Federal Reserve. Because of this, rates tend to be similar across the country, regardless of conditions in your local real estate market. But in order to actually secure the lowest mortgage interest rate possible, you’re still going to have to shop around.
Many companies will advertise “teaser” rates in order to attract business. But the actual rate you receive can vary widely based on your credit score, income, debt, assets, and current employment status. You also have to account for closing costs and consider what it will actually cost to refinance your mortgage.
Despite all of these factors, one-third of home owners don’t comparison shop when looking to refinance, according to a survey from Fannie Mae. They either go with their original mortgage company or take advice from people they know. While they may still get a good deal from their current lender, it’s a mistake not to see what else is out there.
Save Money on Refinancing
Refinancing your mortgage to a better interest rate can help you save money in the long run. Even a half-percent decrease in your mortgage interest rate could mean thousands in savings over the life of the loan. And by working with your local Homes for Heroes specialist, you can save even more money when refinancing your mortgage!
We help heroes — firefighters and EMS, police officers, teachers, military personnel and healthcare professionals — save money when buying, selling or refinancing a home. To get started, simply register online. Once you’ve registered, you’ll be automatically matched with a mortgage specialist in your area. They will work to get you the best refinancing rate possible and further help you save with discounts on their lending fees.
You can also save on closing costs like home appraisals and title fees by using our local deals page. At Homes for Heroes, we’re dedicated to doing everything we can to help heroes save money and accomplish their real estate goals.
Ready to take advantage of the low mortgage interest rates and refinance your home? Register with Homes for Heroes and start saving money today.