As fears of a recession grow due primarily to trade-war concerns, home mortgage rates have followed the 10-year treasury rates down…to their lowest levels in three years. Here’s a quick review of current rates (source: Freddie Mac 9/5/19):
30-year conventional mortgage: 3.49%
15-year conventional mortgage: 3.00%
What’s even more surprising is that non-conventional ‘jumbo’ mortgage rates are as competitive as conventional rates. Just this week we helped a client get a $750,000 30-year mortgage at 3.125% on a second (recreational) residence. We actually had the client spend $2,800 to ‘buy-down’ the 30-year rate to 2.875%; then set up bi-weekly payments, allowing him to pay off early. Not bad for a jumbo mortgage!
These are low rates…something that could very well be temporary and potentially create an opportunity for you. Here’s what you should do now:
- Check the rate on your current mortgage. If it’s higher than these rates…
- Determine if it makes sense to refinance. A quick rule-of-thumb would be 1% higher, consider refinancing. This is particularly true if you plan to remain in your home for ten years or more. Because of the closing costs associated with a new mortgage, you want to determine the ‘breakeven point’…how long it takes your new, lower mortgage to be a better deal than sticking with your current mortgage. If you need help calculating this, contact your accountant or financial advisor.
If you’re considering buying a new home, this should serve as a reminder that now is a great time to buy, from a financing perspective.
Follow The Welch Group every Tuesday morning on WBRC Fox 6 for the Money Tuesday segment.
WBRC Fox 6 Talking Points
“Mortgage Rates Plunge…Providing You an Opportunity”
- Mortgage rates are lowest in 3 years
- 30-year conventional: 3.49%
- 15- year conventional: 3.00%
- Jumbo rates are very competitive
- Calculate your ‘opportunity’
Takeaway: If your mortgage rate is higher than current rates, determine if you should refinance.
Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specialize in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books including J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.