Today's mortgage rates are looking GOOD! Which is always an exciting day for mortgage professionals and enthusiasts like us. We LOVE being able to lock our clients with low rates! They get to enjoy their monthly savings for years to come.
Your interest rate determines how much you will pay on top of principal over the life of your loan.
There are two things to keep in mind when it comes to mortgage interest rates. They can make a big difference in your monthly payment and rates can fluctuate daily according to the markets, current events, economy, politics, and other external factors. This can be a good or bad thing depending on your timing, but overall, rates are generally out of the lenders and borrowers control.
First we will take a look at the difference the interest rate can make in your monthly payment. Then we will discuss some tips on how to find a low rate in the constantly changing rate environment. Spoiler alert: a mortgage broker, like Simplicity Mortgage, has access to a variety of excellent options from different lenders all in one place.
How much of a difference can your interest rate make? A pretty significant one!
Let's look at a few simplified scenarios to show the effect of the interest rate. For our analysis, we will use a 30 year mortgage on a loan amount of $200,000. To keep things simple, our calculations will be for a conventional purchase with over 20% down - so no mortgage insurance, no funding fee, no points. We are also not including property taxes or homeowners insurance in our monthly payment - they are independent of the interest rate. Here are 3 mortgage scenarios:
4.0% interest = monthly payment of $955 (total interest over life of loan $143,739)
3.0% interest = monthly payment of $843 (total interest over life of loan $103,554)
2.5% interest = monthly payment of $790 (total interest over life of loan 84,487)
As you can see, a low interest rate can give you big savings! Locking in a rate that is 1.5% lower can save you $165/month and $59,252 over the life of the loan!
Looking to save more? Use the monthly savings to pay your loan off faster!
If you're up for more savings, you can double down on the power of the lower interest rate. What you do is invest the $165 savings every month back into the loan as a principal only payment. In the example above this would allow you to pay off your 7 years early, while saving an additional $21,466 in total interest!
2.5% interest = monthly payment of $790 + $165 additional principal
Pay off in 23 years; total interest over life of loan $63,020
How do I lock a low rate for my mortgage?
Finding a great rate comes down to doing a little bit of shopping and going with a lender or broker who has a variety or programs available. Having a higher credit score (over 740) will give you access to the very best rates. The type of purchase you are making also effects the rate. Purchasing a primary property and a no cash out refinance normally come with some of the lowest rates. Secondary homes, investment properties and cash out refinances can come with a slightly higher rate. VA and FHA loans often have lower rates than conventional and more flexibility with down payment, but you have to consider the cost of the funding fee or mortgage insurance.
One of the best things you can do is shop around or work with a mortgage broker, like Simplicity. Brokers can be extremely helpful because they industry experts and act as a one stop mortgage shop. You can put in one application and the broker does the work for you. They finding the best loan options and rates for your specific scenario. Here at Simplicity Mortgage, we have a portfolio of over 15 lenders who we intentionally selected to give us a several great options for different borrower & mortgage situations.
Ready to buy, but unsure of your price range?
We can help you answer that question & get you preapproved for a mortgage today!
Wondering how much you could save with a refinance?
We will help you analyze your break even point and how much you could save over the life of your mortgage!
Call Simplicity today to discuss your purchase or homeownership goals! 386-401-9000
Simplicity Mortgage provides customers and clients with home loans and mortgages to fit their home purchase or refinance.
We are located on Dulawton Avenue in Port Orange, FL, just south Ormond Beach. Conveniently located near Daytona Beach Shores and Ponce Inlet.
Simplicity works with borrowers looking for for home financing in all areas of Florida area. Our service area includes Volusia and Flagler counties, Palm Coast, Ormond Beach, Ormond by the Sea, Deland, Daytona Beach, Daytona Beach Shores, Port Orange, Ponce Inlet, New Smyrna Beach, Orlando, Jacksonville and all surrounding areas of Florida.
Our portfolio is made up of 15 or more lenders, which makes it simple for us to determine the best loan option for our clients purchase or refinance.
Our goal is to provide an easy and simple customer experience combined with an low interest rate and minimal closing/financing fees. We are your single point of contact throughout the home loan process. We offer our clients a variety of loan products: Conventional, VA loan, FHA loan, USDA, Jumbo, Non Qualified Mortgage (non-QM), Self Employed, 1099, first time home buyer, investment, and secondary property purchases. We have outstanding options for your refinance as well, IRRRL, Home Equity Loan, Streamline Refinance, Cash Out, Rate and Term. Call Simplicity today to discuss your purchase or refinance. We will utilize our home loan calculator to determine your future mortgage payment with several mortgage rates to help you determine the most beneficial mortgage option for your next home loan.