Right Now is the Best Time of Year to Get a Mortgage
If you've been playing the waiting game with mortgage rates, you shouldn't wait any longer. Interest rates are the lowest they've ever been and more people are refinancing or purchasing a home and now is actually the best time to buy a house. In a new study from Haus, seasonality, loan size, credit scores, and other factors play a major role in mortgage rates that lenders can offer to buyers.
The housing market across the country has definitely had its ebbs and flows with the seasons. January, however, is the best time of year to get a new home loan. Lenders typically offer a discount of nearly 20 basis points compared to the time period between June and October, typically when rates are highest and there's more homebuyers. Once the weather cools, lower mortgage rates are more prevalent and with December and February being the next cheapest months based on the study.
This could naturally be just because there are fewer homebuyers so to balance out the market and keep a steady stream of buyers and mortgage applications, interest rates tend to drop during the winter months. But home buying and refinancing is all seasonal. There's less mortgage origination in the winter months so lenders have to lower their own rates to stay competitive and attract business.
Finding the best possible rate can be tricky though. Even though mortgage rates have risen from the record low just before the new year, they still remain extremely low historically. Economists warn that as the year goes on, rates could potentially rise depending on the trajectory of the pandemic and the economy.
However, buying power is up. This means that homebuyers now have more buying power and can afford more home for less money. For instance, if the interest rates on a $300,000 home were 8%, homebuyers may not qualify. If that same interest rate on the same priced home is 2%, it makes those monthly mortgage payments much more affordable.
Timing the market and when to apply for a new mortgage is just one of the ways that borrowers can save money. The size of the loan is another consideration. Loans with balances between $350,000 and $450,000 can offer a 23 basis point discount on the mortgage rate compared to those under $100,000. The cost of paying someone to originate the loan regardless of the price is the same but the lower the home price, the less of a return to the mortgage originator than the higher-priced home. In order to cover this cost, lenders may increase their rates for lower balance mortgages to compensate. So it really does pay borrowers to buy a more expensive home so long as they can afford it.
If you've been on the fence about buying a new home or refinancing, now is a great time to do so. Fill out the form below and be contacted by one of our preferred lenders. We understand the Columbus real estate market and can get you the right loan for your needs.