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Buyers and homeowners looking to refinance their loans finally received some positive news on September 18, when the Federal Reserve announced a rate cut. federal funds rateits first since 2020. Anticipating this reduction, mortgage lenders began to reduce their offers, which led to Mortgage rates fall to their lowest point in two years, since September 2022. And they have continued to decline in the week that followed.
These declines, along with the possibility of additional reductions in November and December, are exciting for home buyers. Mortgage Rates have increased exponentially in recent years in line with the inflation rate, reaching their highest point since 2000 In 2023, any relief is welcome. To take full advantage of this changing climate, however, it helps to know the nuances of the mortgage interest rate climate. And that means being able to dispel some popular mortgage interest rate myths. Below, we’ll break down four of them.
Find out how low a mortgage interest rate you could get right here, right now.
4 Mortgage Interest Rate Myths You Should Know Right Now
Thinking about entering the home buying market now? You’re ready to apply refinance? Don’t do it without first knowing the truth behind these four popular myths.
Mortgage Interest Rates to Drop Along with the Fed
Sure, mortgage rates can and probably will go down as the federal funds rate does. But they won’t go down by exactly the same amount or even at the same time, because some lenders are starting to price in rumored rate cuts before they’re official. That’s why the mortgage rates most are seeing posted online this week aren’t significantly different than they were posted earlier in September. So don’t expect exact cuts based solely on how the Fed acts. Mortgage rates are influenced by much more than that.
Start exploring your current mortgage rate options online today.
Mortgage interest rates could fall back to pre-pandemic levels
Mortgage interest rates are likely to fall again in the coming months, perhaps quite significantly. But it is highly unlikely that they will return to the levels of 2020 and 2021, at the height of the pandemic. That was when the economy was different than it is today and rates were near record lows. Don’t count on that happening, absent a major economic driver. And remember that today’s mortgage rates, historicallyare already at the low end. So don’t expect them to drop back to 3%..
The mortgage rate you see listed online is the one you will get.
It can be smart (and addictive) to check mortgage rates daily. But it’s important to remember that the one you see listed online on a lender’s website isn’t necessarily the one you’ll be offered. That’s because the mortgage rates listed online are geared toward those with the cleanest credit histories and the highest rates. credit ratings. If you don’t have both, you’ll be offered a higher rate. But that’s not the only downside. Mortgage rate lists often also have mortgage points and other discounts already factored in. So the rate you’re offered, even with a high credit score, could end up being higher if you forgo paying these fees and discounts. Read the fine print accordingly.
Mortgage and mortgage refinance interest rates are the same
Are you a homeowner looking to refinance your home loan and now see an opportunity to act? You may not be wrong. Just make sure you’re looking in the right column online, because mortgage interest rates for purchases and refinancing existing loans are not the same. And there could be a difference of 25 basis points (or more) between the two. So make sure you’re monitoring the right type of rate before you get started.
Compare the different mortgage purchase and refinancing rates available to you here.
The essentials
The homebuying and refinancing process can be stressful enough without having to deal with incomplete or misleading information. So make sure you understand the myths above and the realities that go with them. By doing so, you can better position yourself for a successful homebuying (or refinancing) now and throughout your homeownership journey.
