Mortgage Interest Rates the Lowest after 50 Years

For a lot of lenders and institutions such as Freddie Mac, now is the most ideal time to buy a property. The mortgage interest rates has just gone down. In fact, it has hit a new low.

Based on the primary mortgage market survey of Freddie Mac, the fixed mortgage interest rate for a 30-year home loan has dipped to 4.15 percent, the lowest it has ever been for over half a century. The vice president for Freddie Mac Frank Nothaft believed it has something to do with the new announcement of Federal Reserve. It promised to keep the interest rate very low over the next two years amid the downgrade rating of the country by Standard & Poor’s.

However, the good news in mortgage interest rate didn’t really translate to home sales. NAR (National Association of Realtors) reported that the month-over-month last July decreased.

How to Apply for a Mortgage

There are plenty of properties that are up for sale; some of them are available in auctions, and others are foreclosed. There are also homes without any liens or with very clean titles. Regardless, if you wish to buy a house, you have several options these days.

Nevertheless, unless you have saved a considerable—and, yes, huge—amounts of money, you have to take up a mortgage.

A mortgage is a kind of debt you obtain for your home. A lender provides you the money to pay the seller, but you need to pay the principal amount along with the decided mortgage rates every month during the life span of the home loan (the longest is 30 years).

Now in general obtaining a mortgage should not be difficult, as long as you keep the following tips in mind:

Determine how much mortgage you can afford. Before you take up a loan, determine how much of your income you’re willing to set aside for your house expenses, including mortgage. According to National Association of Home Builders, it’s considered affordable if you spend 28 percent or less of your gross monthly income to it.

Compare mortgage quotes. Taking into consideration tip no. 1, you should compare the different loan packages offered by a variety of lenders. This is the reason why you should work with a mortgage broker, since he can introduce you to several lenders. To better help you decide which of them can give you the best deal, you can use a mortgage calculator.

Check your credit history. One of the reasons why you’re slapped with very high mortgage rates is you have a very poor credit score. Normally, it’s below 620, but lenders can have their own preferred credit score. It’s recommended that you ask. A good credit score also prevents you from falling into scams, as you don’t have to settle for a bad credit mortgage.

Pay at least 20 percent of the property value. This is to avoid paying the private mortgage insurance of your mortgage loan. As a form of protection against losses due to default, your loan may include a PMI if your down payment is small, and you have to pay it every year. A lender can charge you as much as $1,500 for it to your account.