Patrick Penner

Mortgage News – April 2024 The Consumer Price Index (CPI) report for March 2024 was released on April 10th, bearing hotter-than-expected numbers. Consumer prices rose in March, leading many financial experts to believe that stubborn inflation numbers may deter the Federal Reserve from cutting the benchmark interest rate any time soon. Now we are seeing more fluctuation in mortgage rates, and home buyers are seeking creative methods to secure more favorable terms. Here are three ways borrowers are locking in lower rates. Temporary Rate Buydowns A temporary rate buydown happens when the interest rate on the mortgage is lowered for a specific time frame, typically within the first few years of the loan term. The seller, builder, or lender can pay for the buydown, allowing the borrower to “ease into” full monthly payments. For example, in a 3-2-1 buydown, the rate is reduced by 3 percentage points the first year, 2 percentage points the second year, and 1 percentage point the third year. At the end of the third year, the mortgage reverts to the original fixed rate. Discount Points Discount points are upfront fees paid to the lender at closing, which permanently reduce the interest rate on the loan. One discount point costs 1% of the total mortgage, and each point paid upfront reduces the interest rate by 0.25%. For example, on 30-year fixed rate loan of $320,000 at 7% interest, if the borrower pays $6,400 for two points upfront, then the interest rate is reduced to 6.5%. In this scenario, the borrower saves $38,286 over the life of the loan. Assumable Mortgages In this type of loan, the buyer takes over the seller’s existing mortgage at the same interest rate the seller had. So, if the seller has an interest rate of 3%, then that’s the same interest rate the buyer would pay. Let’s say the seller is asking $450,000 for the home, but he still owes $200,000 on the loan. If the lender agrees, the buyer will take over that remaining $200,000 mortgage commitment, but must pay the seller $250,000 at closing to make up the difference. There are many types of loan programs available, and we can help you find the right loan to fit your needs. If you – or anyone you know – needs a mortgage pro, please don’t hesitate to give me a call.

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Waiting for mortgage rates to fall? A lot of other buyers are too. When rates are higher, there are fewer buyers in the market. But when rates start to come down later this year, buyer demand will ramp up. If you want to beat the crowd, you could sell now. It’ll save you a heap of competition and stress down the road. Let’s chat. #realestateadvice #housingmarketupdate