The Benefits of a Lower Fixed Rate Mortgage

There is no denying the fact that the prices of homes have been falling. Despite this development, many people are still reluctant to invest in a new home. But do take note that the mortgage rates are also falling. So this is a very good incentive for you to seriously consider buying a new house or refinancing your existing mortgage.
Some Statistics to Consider
For 30-year fixed rate loans, the national average has fallen to below 5 percent. This is the first time in more than 30 years that the five percent benchmark for fixed rate mortgage has been breached. So it is expected that more and more homeowners will benefit from this. If you are planning to buy a house, then today is the best time to make your move. The drop in fixed rate mortgage could mean big savings in the long run.
Obviously, there is still speculation that the homes market has not reached its bottom. So there are expectations that prices and interest rates will still go down. As a result, there are so many homeowners who are waiting for the rates to further go down.
However, the general values of homes remained stable. For example, the median home price across the nation is just under $120,000. So, the fact that home prices seem stabilizing coupled with the drop in fixed rate mortgage could be good signs that this is the right time to snatch a good deal.
Lower Rates Mean Lower Monthly Payments
With fixed rate of six percent, you may be able to afford a home worth $100,000. At this rate, you can keep monthly mortgage payments at around $600. In case the fixed interest rates will further drop by a percentage point, then you could afford a home worth $115,000 without spending more money per month on mortgage payments.
The added 15 thousand dollars may not look big enough for some people. However, this amount could mean an extra bedroom for your home or some amenity that you might want to install or construct on your property.
The drop in mortgage rate is attracting not just first time buyers but homeowners want to refinance their existing mortgage. Refinancing a mortgage with a smaller interest rate could mean a lot for your budget.
So if you think that you are getting a good deal from the 6 percent fixed interest rate, the current drop to 5 percent and lower is definitely a much better deal. This means that you will be able to save lots of money because your monthly mortgage payments would be significantly lower. This could also mean that you can pay off your home sooner.
You can gain a lot if fixed rate mortgage drops. Lower mortgage means more activity in the housing market. So this could be the best time to find favorable deals from mortgage lenders.
Rob K. Blake, refinance expert and author, educates mortgage shoppers on finding local providers by state like Washington Mortgage Brokers and Lenders and provides reviews of national companies like America's Servicing Company.
Article Source: http://EzineArticles.com/?expert=Rob_K._Blake