There is a reason the borrowers required mortgage this year. Mortgage loan rates they have been sitting at attractive levels since January, and their growth is not expected in the near future. In fact, Freddie Mac predicts that the average 30-year fixed-rate loan will be 3.1% in 2021. That’s a notch higher than last year, when rates fell to record lows, but it’s still pretty competitive on a historical basis.
Freddie Mac also expects $ 3.9 trillion in mortgage loans this year. That’s up from the $ 3.5 trillion forecast in April. In fact, Freddie expects such a lot of mortgage activity this year that it will drop to $ 2.6 trillion in 2022.
6 simple tips to secure a 1.75% mortgage rate
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Should you get a new mortgage this year?
In terms of mortgage rates, now great time to buy a home… But in terms of inventory and house prices, the opposite is true.
Housing stocks this year were extremely limited and this was a problem for buyers. Limited inventory means you have fewer options to choose from, so it can be difficult for you to find a home that suits your needs. And also the low level of stocks contributes to the rise in house prices.
If you buy a home today, you will probably pay more for it. Or, in other words, you get a lower return on investment. And while you can get some savings from a lower mortgage rate, the amount you pay for a home can be high enough to offset those savings.
On the other hand, when Freddie Mac announces that he expects to receive $ 3.9 trillion in mortgages, it is not just about new home loans. It also speaks of refinancing…
While today can be a challenging time to buy a new home, it is a great time to refinance. Refinancing rates are very competitive, and you can significantly reduce your housing costs by replacing your existing home loan with a new one with more favorable terms.
However, you need to make sure that refinancing makes financial sense before going down this route. Generally, your goal should be to lower your mortgage interest rate by about 1% (or more) during refinancing. If you already have a low rate, it may not be worth taking a new loan and paying closing costs…
And, speaking of closing expenses, you also need to make sure that you are going to stay in your home long enough to get the savings after you pay them. If you are charged $ 6,000 in closing costs to lower your monthly mortgage payments by $ 200, that means you are expecting a 30-month break-even period. If you plan to move within three years, refinancing won’t make sense.
Ultimately, Freddie Mac believes we are going through a busy year in the mortgage world. And if rates remain close to current ones, we can expect many people to apply for new loans or swap out their existing mortgage loans for better ones.