Great news for home buyers. 

Freddie Mac announced that the 30 year fixed rate mortgage now averages at 4.21%. This is the lowest it’s been since last November.

Click here for more detailed information on this and other types of mortgages.

If you are thinking of buying a house, now is the time to talk with your REALTOR and mortgage lender so that you can take advantage of these rates. They are the lowest they have been in the last 6 months so you need to act fast. 

Just because the rate is lower now than it has been, does not mean it won’t go back up again. Many homebuyers think they can time the rate and since the rate is going down, they think it will continue on it’s downward path. 

Yes, that happens sometimes but not always.

The graph below clearly shows that November 7, 2013 was the last time that the 30 year fixed mortgage rate was at 4.21%, after that it just went back up again.

Freddie Mac Mortgage Rates

Here is an extremely simple example using two different mortgage rates and how this affects both your monthly payments and the long term cost of purchasing a home which will demonstrate why the mortgage rate you pay is so important. 

NOTE: I am not a licensed mortgage lender, nor do either of these examples consider any variables like down payment, additional monthly payments, type of mortgage or Primary Mortgage Insurance (PMI), etc.

In both examples the mortgage amount is $200,000 for a 30 year fixed rate.

Example 1: Interest rate is 4.21%.

$200k at 4.21% interest over 30 years.

Total interest paid for the life of the mortgage: $152,512.73

Monthly mortgage payments: $979.20

Total cost to purchase: $352,512.73

Example 2: Interest rate is 4.5%

$200k at 4.5% interest over 30 years.

Total interest paid for the life of the mortgage: $164,813.42

Monthly mortgage payments: $1,013.37

Total cost to purchase: $364,813.42

Difference: $12,300.69

All things being equal, the above example shows a $12,300.69 difference in the total cost of purchasing a home, based on 2 different interest rates.

Can you really afford to take the chance that the interest rate will go down even further?

It might, but you never know, it could just go back up again.