By: Aaron Sapp
Vice President, NMLS #447059
Interest rates have risen recently, making some people leery about buying a new home. But consider this: Last year, Freddie Mac reported interest rates averaged an historic LOW of 3.65%. When you look at rates over the last 44 years, you’ll find that from 1979 to 1990 –11 years of the 44-year period – rates were in double digits. The average rate over the 44 years is more than 8%.
From 2006 and until recent months, the average annual interest rate has steadily declined every year. As a result, many consumers believe today’s rates are too high for them to consider home ownership. Reality is, interest rates are extremely low, making it a great time to buy a home. Here, our mortgage lenders share some insight.
Justin Gensler and Natalie Dodson
Natalie C. Dodson, Assistant Vice President | Mortgage Lending NMLS #574151
“I am not that old, but have been in the business for 15 years. So I can only imagine how our older mortgage officers feel when they have a young, first-time home buyer come in thinking 4.25% is a high interest rate. For many customers, I will look up what historic rates are, because the average over the last 10 years is still above 5%. Or I will tell them a story of how my grandparents refinanced out of a 13% interest rate!
“I also tell the story of how just eight years ago, I refinanced my home to a 15-year mortgage at 4.625%. Not 2.375%. Not 3.000%. Not even 3.375%. Then, they realize that rates are still amazing. Our buying potential is still there and, will be, even if we get back to 6%. Our families and kids and everyone will still want to own a home and have a little piece of the American Dream. And today’s interest rates will help them do that.”
Justin D. Gensler, VP | Mortgage Lending NMLS # 611367
“About a month ago, I sat down with a couple to discuss the purchase of their first home. They were very interested on exact figures because they like to follow their budget very closely. We spoke about the recent rate increases dating back to November of 2016, and they were concerned.
“They wanted my advice on what I thought the rates were going to do going forward. My advice to them was this: It’s important to control the items you can control. No one can control the rate market, but you can control other things.
“If costs are important to you then I would recommend to definitely get a home inspection when purchasing a home. A home inspection will let you know what items are going to need to be repaired. If the roof of your property only has a self-life of five years that is a big expense you are going to incur in the near future, sometimes upwards of $10,000. However, if interest rates increased .5%, (this is very extreme; rates usually only increases .125% at a time) that would increase your payment about $35 per month on a $120,000 loan. The couple appreciated this insight, and now they are under contract to purchase their new home with us. They have decided to have a home inspection done, too!”
Tell us your story
If you’re already a homeowner, when did you buy and what was the interest rate when you bought your first home? Have you bought another house or refinanced since then? What advice do you have for first-time homeowners?