What Low Mortgage Rates Mean for Borrowers

October 1, 2021
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If you're a potential homebuyer who's had your ear to the ground in recent months, by now you've likely heard about how low mortgage rates currently are. Is this really the case, and what do low mortgage rates actually mean for you and other buyers?

At Integrity First Lending, we're proud to help all our clients find the very best mortgage rates -- and just in case you're wondering if what you've heard is true, we can confirm that mortgage rates have approached record lows in recent months. Why are rates so low, and how will you be affected if you're either a first-time buyer or someone looking to refinance their current mortgage? Here's a primer.

Why Mortgage Rates Are so Low

There are a few reasons why mortgage interest rates are so low right now:

  • COVID-19 uncertainty: There's no question that the COVID-19 pandemic, and its related recovery efforts, have helped to lower mortgage rates due to economic uncertainty.
  • Low federal rates: Due to this uncertainty, the Federal Reserve has lowered interest rates to help boost the economy.
  • Strong housing market: Meanwhile, as the pandemic has made more people think about the future, there's been strong interest in the housing market that has driven demand.

Impact on Homebuyers

As a homeowner, it's vital to note that while interest rates play a major role in your purchase, they're not the only factors that play into your financial decision-making process. We also urge you to talk with an Integrity First Lending loan officer to understand the intricacies of low mortgage rates -- namely, how they affect your monthly payments and the maximum interest rate you'll be able to qualify for with your credit score.

Your exact interest rate is determined by several factors, including your credit score, debt-to-income ratio and other factors. These rates fluctuate constantly, so it's best to have a lender update the rate at least once per month.

It's also important to understand the differences between fixed and adjustable interest rates. While fixed rates offer you peace of mind that your rates won't change for the life of the loan, adjustable rate mortgages (ARM) allow you to take advantage of low initial interest costs before they adjust higher after an initial period.

Impact on Refinancing

If you're already a homeowner but have been looking for the ideal time to refinance, this period of low interest rates might be ideal for you. This is because a home equity line of credit (HELOC) can help you enjoy a lower interest rate, lower closing costs and even reduce your monthly payment.

In short, the housing market is strong right now due to COVID-19. If you're looking to buy a house or refinance your current mortgage, you can likely obtain great rates -- if you're willing to try and compete in a competitive market, that is.

For more on how we'll help you do so, contact the pros at Integrity First Lending today.

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