Getting the money together for a down payment on a new home doesn’t have to be hard. If you plan, save, and make use of potential resources, you’ll be on your way to owning a home in 2021.
Homes are more affordable today than they have been over the past few years. Check out this video to find out why!
In This Article:
- Mortgage Interest Rates Hit Historic Lows
- Get Pre-Approved For a Home Loan
Buying a home is a big financial investment and likely the most expensive purchase you will ever make. Unlike most other things you buy, a home can provide you with equity and can help you build wealth over time.
Luckily, today is a prime time to buy real estate. In fact, buying a home is more affordable today than it has been in years. Is it because home prices have dipped?
In certain parts of the Pacific Northwest – like Seattle – home prices have actually decreased at one point over the recent past. That said, home prices across WA, OR, ID, and CO have increased over the last few years.
So, how can it be that homes are more affordable these days? It’s because interest rates are so low.
Mortgage Interest Rates Hit Historic Lows
Over the past few months, mortgage interest rates have hit all-time lows a handful of times. When interest rates fall, homes become more affordable because you pay less interest over the life of your home loan.
These days, you can get a 30-year fixed-rate mortgage at just over 3%. That’s an incredibly low rate to pay and can help make your mortgage very affordable. Even a 1% difference in rates can mean the difference between tens of thousands of dollars in interest over the life of your loan.
For this reason, buying a home is more cost-effective today than it has been over recent years. Buying a home when rates are low is a great time to lock in your rate and save on your home purchase.
For example, let’s see what the difference would be if you paid 4% versus 5% in interest on a 30-year fixed-rate mortgage of $400,000. If you lock in at 5%, you would have to pay $368,514.58 over the life of your loan. On the other hand, a 4% rate means you would pay $284,746.93 in interest over the 30-year period. That’s a saving of over $83,000!
That’s why it’s helpful to keep tabs on rates and swoop in on the market as rates hit rock bottom, which is where they are now. And working with a reputable mortgage company can help ensure that you get the best rate possible on your home loan.
Get Pre-Approved For a Home Loan
The best way to make sure you’re ready to buy while rates are low is to get pre-approved for a mortgage. Getting pre-approved will give you a chance to get all your finances in order and give your lender a head start on the mortgage approval process.
With all the proper documentation and information on hand, your lender will be able to assess your financial health and determine how much you can afford in a home purchase. Having this number in mind will help you focus only on properties that you can afford without wasting your time looking at homes that you can’t afford. It will also help avoid disappointment.
Once you find the home of your dreams, the final mortgage approval process can move along faster because your lender has already started the process. Unless something in your financial life has changed or the home is appraised lower than what you agreed to pay for it, there should be little reason for your mortgage not to go through.
Team Up With a Mortgage Company in WA, OR, ID, or CO
Interest rates are working in your favor right now, so let’s connect to move your homeownership goals forward today. Sammamish Mortgage is a local mortgage company serving the broader Pacific Northwest region, including Washington state, Idaho, Colorado, and Oregon. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria and have been doing so since 1992. Please contact us if you have any questions or are ready to start the mortgage application process.