Whether you are refinancing your mortgage or purchasing a new home, today’s falling mortgage rates can significantly lower your monthly mortgage payments, adding money to your household budget.
If you are thinking of buying, however, falling rates bring an added bonus: they bring home affordability to an all-time high, raising your maximum purchase price and allowing you to buy a lot more home in Marin County for your money.
For Home Buyers, Mortgage Rates On Sale
According to Freddie Mac’s most recent mortgage rate survey, the average 30-year fixed rate mortgage fell to 3.62% last week, down from 4.08% in March 2012, and down from 4.60% from one year ago.
It’s a great time to be a buyer.
And, this week, rates have moved lower still. From Marin County to Bethesda, Maryland to Miami, Florida, mortgage rates are easing and poised to register a new, all-time low for the third consecutive week. Mortgage rates have been down over consecutive days dating back to last week.
Purchasing Power Up 11% Since Last Year
Rapidly changing mortgage rates can make for a heady home shopping experience.
Falling mortgage rates can affect the way a home buyer looks at properties in two ways:
- They can either make a given home’s monthly housing payment that much more affordable to a buyer. You can set your sights on a price range for a home, then watch as your corresponding monthly mortgage payment drops with the rates.
- or they can expand your home purchasing power to a higher, maximum price point. Since July 2011, that maximum price point increase has been significant.
Assuming a principal + interest payment of $4,000 per month and a 30-year loan term, a category that includes 30-year fixed rate mortgages and most adjustable-rate mortgages, here’s a maximum loan size comparison of the last 12 months :
- July 2011 : A payment of $4,000 affords a maximum loan size of $788,520
- July 2012 : A payment of $4,000 affords a maximum loan size of $877,636.
With an increase in maximum loan size of more than $22,000 per $1,000 of monthly payment in just 12 months, it’s no wonder that multiple-offer situations have been so common in Marin County — today’s buyers know that low home prices and low mortgage rates are combining to make home buying more affordable than at any time in recent history.
Looking at an $800,000 mortgage, the monthly payment at 4.60% last year was $4,101 per month and at 3.62% last week $3,646 per month: a hefty $455 monthly saving and $5,460 yearly saving.
Home Affordability : Tied To Low Mortgage Rates
However, the buyer-friendly environment can’t last forever.
First, home prices have started to rise both nationwide and here in our Marin County Market, the median sale price increased by 4.1 percent in June 2012 compared to June 2011, reversing the downward trend of recent years (see chart below.) Demand for homes has outpaced home supply in Marin County for the past six months, resulting in bidding wars and driving home prices higher.
Second, low mortgage rates can’t last forever.
A recovering economy will lift mortgage rates back above 4 percent, a scenario that will hit home affordability hard.
Home-buying conditions are optimal this season. If you’re in the market for a new home, contact me at 415-505-4789 or Sylvie@YourPieceofMarin.com and together with your loan officer we will help you maximize your home purchasing power.
About the author: The above Real Estate information on Marin County Real Estate was provided by Sylvie Zolezzi. I can be reached via email at Sylvie@YourPieceOfMarin.com or by phone/text at 415.505.4789. I specialize in luxury residential real estate in beautiful Marin County, just north of the Golden Gate Bridge.
My goal is to provide you with the best home buying or selling experience possible by combining my business and financial experience with meticulous attention to detail and a warm, personable and caring approach to meeting your needs. I have an excellent track record as a successful, results-oriented negotiator and effective communicator. My analytical skills and understanding of current market conditions, along with my ability to utilize a broad range of cutting edge technological and marketing resources, make me an invaluable real estate resource.
I am a long term Marin County resident and home owner. I strongly believe our quality of life is extraordinary and practically unmatched. I love our community, quaint towns and vast open space and never tire of their breathtaking beauty. I know the neighborhoods, the schools, the amenities; I know where you want to live. I know and love Marin County!
I specialize in Luxury Homes in the following towns in Marin County: Sausalito, Tiburon, Belvedere, Mill Valley, Corte Madera, Larkspur, Greenbrae, Kentfield, Ross, San Anselmo, San Rafael, Fairfax, and Novato.