Today's mortgage rates¬†have dropped back to¬†4%.
According to Freddie Mac, conforming 30-year mortgage interest rates eased 4 basis points (0.04%) this week to reach¬†to 4.00%, on average, nationwide. The average 15-year mortgage rate also dropped, falling 2 basis¬†points (0.02%), to 3.23¬†percent.
Rates are lower on weaker-than-expected economic data, economic uncertainty overseas, and expectations that the Federal Reserve may not see sustained domestic growth until sometime in 2016.
Meanwhile,¬†mortgage rates remain low as compared to last year, and to history.
Home purchasing power is up close to 10% from last year, which means that a homeowner whose maximum purchase price was $400,000 can today¬†purchase¬†a $440,000 home for the same mortgage payment; and, millions of U.S. homeowners are potentially eligible for a refinance.
Low mortgage rates have put homeowners in the money for a refinance where "in the money" is defined as having a loan balance of at least $50,000; at least 10 years remaining on your home loan; and a mortgage rate of 150 basis points (1.5%) above current mortgage interest rates.
Homeowners who refinanced last year will save $5 billion in the first 12 months of their new home loans, collectively. Given this year's ultra-low mortgage rates, homeowners refinancing in 2015 will save even more.
It's a terrific time to compare today's mortgage rates.
Each week, government-backed Freddie Mac conducts a mortgage rate survey of 125 banks nationwide. The survey asks banks to reply¬†with their "going" mortgage rate for a prime mortgage borrower, along with¬†the number of accompanying discount points required to lock that rate.
A prime borrower, as defined by Freddie Mac, is one with ample home equity or downpayment, high credit scores, and documented income which meets or exceeds mortgage underwriting standards.
The Freddie Mac survey applies to home purchases of primary residences only, which means that¬†HARP loans¬†from Fannie Mae and Freddie Mac are not included in the results.
Rates for¬†VA loans¬†or FHA loans, which are backed by the Department of Veterans Affairs and the Federal Housing Administration, respectively, are also not included but¬†VA mortgage rates and FHA mortgage rates are typically¬†lower than conventional ones by 25 basis points (0.25%), at least.
This week's Freddie Mac survey shows the average 30-year fixed rate mortgage rate at 4.00%.
In order to get Freddie Mac's published 4.00% rate for a 30-year loan, or 3.23% for a 15-year loan, banks are requiring borrowers to¬†pay 0.7 discount points and 0.5 discount points, on average, respectively.
Each full discount point adds $1,000 in closing costs for every $100,000 borrowed such that¬†home buyer borrowing at the baseline 2015 mortgage loan limit of $417,000 and using a 30-year fixed should expect to pay ($417,000 * 0.7% = $2,919) in discount points at closing.
A home buyer purchasing in a high-cost area such as Orange County, California; or San Francisco, where loan sizes range as high as $625,000, should expect to pay ($625,500 * 0.7% = $4,379).
Mortgage rates fell nationwide but, on a region-by-region basis, they're dropped by different amounts. The rate quote you get from the bank will depend on the location of¬†your property.
In today's market, the best place for¬†low interest rates is the Northeast.
Mortgage rates¬†are lowest in Freddie Mac's Northeast¬†Region, an area comprised of New York, New Jersey, Pennsylvania, Delaware, Maryland, Washington, D.C., Virginia, West Virginia, Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut.
Northeast¬†Region mortgage rates average 3.97% with an accompanying 0.6 discount points. This is slightly better than rates in the West Region, which includes¬†California, Arizona, Nevada, Oregon, Washington, Utah, Idaho, Montana, Hawaii, Alaska, and Guam.
West Region mortgage rates also average 3.98%, but require an average 0.8 accompanying discount points.
By contrast, the mortgage rates are highest for applicants in the Southwest Region, an area which includes¬†Texas, Louisiana, New Mexico, Oklahoma, Arkansas, Missouri, Kansas, Colorado, Nebraska, and Wyoming.
Rates in the Southwest Region average 4.07% with 0.5 discount points required.
The difference in regional rates¬†means that a home buyer in Philadelphia¬†will save $16 per month on a $300,000 mortgage as compared to¬†a buyer in Miami, Florida; and¬†will pay $600 less in closing costs, on average.
Northeast borrowers are also getting the best rate-and-fee combination on 15-year loans. Rates are nearly one-eighth of a percentage point lower as compared to loans in the Southwest region.
By region, Freddie Mac reports the following rate-and-fee combinations :
The good news for all mortgage borrowers is that discount points are tax-deductible¬†in many situations, which reduces their effect on your bottom line.
They're also optional so if you prefer a loan with "no points" or wish to compare your choices, just be sure ask your lender. Most¬†banks make no-point rates available to borrowers, and some will offer mortgages with no closing costs whatsoever.
Mortgage rates today are low. Be sure to get a quote.
The 30-year fixed rate conventional mortgage rate now averages 4.00%. If you missed your chance to refinance earlier this year; or, if you currently pay mortgage insurance, it's a good day to explore your home loan options.
The typical refinancing household saves more than 30%, according to Freddie Mac, so see what kind savings you can take yearly. Rates are complimentary and there's¬†no social security number required to get started.
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2015 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)