Mortgage Rates: What You Need to Know Now

Whether you’re shopping for your first home or a Hawaii vacation property, now is a great time to buy. Why?

Mortgage rates, of course!

Mortgage rates are the second largest factor when calculating affordability after home price.

In the wake of the economic downturn, mortgage rates have held steady at near historic lows. The current interest rate on 30-year fixed rate loans is 3.5{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7}. This means that you can buy more and still have a low monthly payment.

Mortgage Rate Impact

The chart above shows just how low current rates are when compared to the past 30 years. It also depicts the impact your mortgage rate has on your monthly payment. For only $898 per month you can get a $200,000 30-year mortgage at the current 3.5{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} rate. However, that same mortgage at the 30-year average rate of 7.5{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} would be $1,398. That’s a difference of $500 every month!

The Bottom Line

Home prices here on the Big Island of Hawaii are still down more than 10{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} from their boom year highs. That coupled with the low mortgage rates make this a perfect and affordable time to buy. But rates and prices will not stay this low for long.

[bctt tweet=”Whether it’s your first home or a Hawaii vacation property, now is a great time to buy.”]

Freddie Mac’s Chief Economist expects mortgage rates to average 4.1{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} in 2016 and 4.8{22208a55700cbb7beaf8dde94ccfb5c623055f8fb5d593660fcb30af3ced07e7} in 2017. Also, home prices nation-wide are expected to outpace inflation. That’s even more true for Hawaii, given the influx of international buyers. This combination means that 2016 may be the best time to buy for years to come.

What This Means for You

The Seller: Your home will have more potential buyers. This means you’ll get more for your home, and your home will likely sell faster!

The Buyer: You will get more home for less money. This mean that right now you may be able to buy your dream home.

Photo by GotCredit