Realtor Answers: What Do Low Interest Rates Mean For You?

Loan rates hit record lows last week. According to bankrate.com, which is a well-respected chronicle about all things financial, the 30-year fixed-rate mortgage fell to 4.21 percent, although they started back up this week. A year ago it was 4.45 percent and a month ago, it was 4.34 percent.

Rates have never been better on mortgages, but the rate you get will depend on a lot of individual factors: what are you buying, what’s your credit score, how much money are you putting down, what kind of mortgage you are applying for.

My friend Bob Davis, who is a mortgage broker with Black River Mortgage in Chester, says if you’re looking for a 30-year fixed-rate mortgage, you have a high credit score and a 20 percent down payment, you’ll get “about 20 percent.” The rate is less for a 20-year or 15-year mortgages.

“If you have a 20 percent down payment,” he told me, “you’re going to get a good deal.”

So what can you do to take advantage of these low rates?

• Get yourself prequalified before you start looking for a home. Your Realtor, banker or a mortgage broker like Bob can help you do that. It lets you know what you should be looking for and gives you a lot of negotiating power.
• Check your own credit scores. You can do it free through government-sponsored Web sites.
• Work with a Realtor to find a home that fits your needs and lock in a price.
• While you should definitely shop for the best rate, don’t get frustrated if you can’t find rates as low as those touted in news stories. The rates we’re seeing are incredibly low and there’s so much involved in setting a rate, that you may never see the 3.94 percent the Daily Record mentioned last week.
• Don’t wait. It’s a long process to get a mortgage and the tiny bit you save or lose won’t make a different. Besides, most experts say mortgages won’t drop much lower.
• Similarly, if you have a commitment, don’t throw it out for a few tenths of a percent. You have to start the entire process over again, including all of the application fees.

Another impact of low rates is increased buying power and affordability. If you want to be a homeowner but you’re not sure you qualify, call a Realtor and discuss your situation with him or her.

Meanwhile, I just returned from a meeting in Texas where Keller Williams agents from around the world talked about what’s working and what’s not in this crazy real estate market. We talked about giving buyers and sellers better service, responding more quickly to your phone calls and emails and using technology to make the home-buying experience easier. New technology, for instance, makes it easier to give a virtual tour of a home that’s for sale. If you’re selling your home, you need all the advantages you can get, and a virtual tour is a good advantage over nearby homes without one.

Talk to your Realtor about interest rates, virtual tours and other developments in buying and selling homes, or call me and I’ll answer your questions.