Lately, it can feel like each day brings a new headline about fluctuating market behavior. But amid the ups and downs of 2020, there may be some potential good news on the horizon. On July 16, 2020, the interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1,2,3
Good news for homebuyers
In other words, it's uncertain how long these historically low rates will last. Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. It’s always a good idea to consult with your tax, legal, and accounting professionals before considering any changes to your living situation.
Good news for investors
Good news for everyone
Whether or not rates will drop even lower is anyone's guess. Even though it seems unlikely, mortgage issuers are dealing with a level of uncertainty that makes it harder for them to judge risk and assess the long-term value of the loans they originate.
Bad news for refinances
As of August 14th, Fannie Mae and Freddie Mac are charging a fee of 0.5% on refinances of government-backed mortgages. This will apply to both cash-out and non-cash-out refinances.5 For example, if you planned to refinance your home mortgage and had a $200,000 balance on it, the new fee would cost you $1,000. This will take effect on all loans that are bought, aka closed, on or after September 1st, 2020.
You would not be able to avoid the fee if you started a refinance today because it takes banks around 48 days to close the loan. Also, homeowners who are in the process of refinancing may still get hit with the fee if their new mortgages don't close before September 1st.
1. OCRegister.com, July 16, 2020
2. Realtor.com, July 13, 2020
3. FreddieMac.com, July 16, 2020
4. TheBalance.com, February 10, 2020
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.