Monday, I showed property to Clients in Newark, CA. I showed a three bedroom, 2 bath house in a great neighborhood for bout $349,000. Can you believe this? I showed homes in this area years ago for roughly $549k to $600k; this was amazing for “Buyers”!
Also, Rates for borrowers with the best credit dropped half a percentage point or more by Monday afternoon. Earlier this week, the national average for 30-year, fixed-rate mortgages was 6.15 percent, down from 6.55 percent a week earlier.
Geez, when rates unexpectedly hit the high 5’s people started pouring in, referring to interest rates for 30-year mortgages, some of which are in the 5.75 percent range, if the borrower is willing to pay a “point” upfront to lower the rate. A point is equal to 1 percent of the loan amount.
The decline in rates should kick start some sideline people and help some people get overall lower payments Rates just went crazy when the Fed bailed out or took over struggling mortgage financing companies Fannie Mae and Freddie Mac.
How much can lower rates save you?
Rates for 30-year loans of $729,750 or less fell this week after the government announced a rescue plan for Fannie Mae and Freddie Mac, which provide financing for most mortgages. Here’s an example of how falling rates could reduce payments for a borrower seeking a 30-year, fixed-rate mortgage of $450,000. The example assumes the borrower has a credit score of 720 or higher, a down payment of 20 percent, and paid one “point” in fees. A point is equal to one percent of the loan amount, or $4,500 in this example.
Last week’s rate: 6.25%
Monthly payment of principal and interest: $2,770.73
This week’s rate: 5.75%
Monthly payment: $2,626.08
Savings: $144.65/month
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