The decision to buy a home is one of the most important financial decisions someone will make in their lifetime. Mortgage rates are at historic lows, and many people want to take advantage of these low rates now before they increase again. If you need help understanding how mortgage rates work or when the best time to finance is for your situation; then this blog post is for you!
This blog post will discuss how to use online calculators, mortgage rates history, and other tools, to make decisions about the best time to finance.
The Importance of Using Online Calculators
There are many variables that go into deciding whether or not you are ready to buy a home now . An article is no substitute for personalized advice from a professional. This is why it’s important to use online calculators and tools that quickly give you an idea of how much home you can afford, what mortgage rate you qualify for, or how much your monthly payment will be.
Here are a variety of different calculators you can use to help make the decision about whether or not to buy a home now!
How Much House Can I Afford?
Whether you are in the beginning stages of buying a home, or already have an accepted offer, this calculator is essential in helping determine how much you can afford. Knowing how much house you can afford will narrow down your search to homes that fit within your budget. After plugging in general information including income and credit score, the calculator will give a rough idea of how much house you can afford. If you have any pre-approval letters from lenders, those numbers may help refine your search as well.
This is another essential tool for determining what mortgage rate you qualify for, whether or not it makes sense to refinance your home, or if you should pull out equity in an existing property to purchase a new one. It is important to note that this calculator does not factor closing costs into the amount of interest you will pay on your mortgage. For example, if you are buying a $150,000 house with 5% down and your closing costs are $6,000, then your total loan amount is $156,000 and you will pay interest on this entire amount.
If you would like to see how refinancing or pulling out equity in your home could fit into your financial plan; make sure to use a calculator that factors closing costs into the equation, such as one of these:
How Much Will My Mortgage Payment Be?
Mortgage rates are constantly changing and individual lenders set their own rates as well. To get a general idea of what your monthly payment would be, it is important to use a mortgage calculator that factors in the interest rate, loan amount, and other variables specific to your situation. These calculators can provide a very accurate estimate of your monthly payments including taxes and insurance.
As part of the mortgage process, you will probably be pre-qualified for a certain interest rate. It’s important to note that this does not guarantee what loan programs you qualify for or what rates specific lenders may charge you. Generally speaking, these online calculators are the most accurate way to get an idea of what interest rates are doing on a national or local level.
Mortgage Rates History
The chart below shows the daily movement in 30 year mortgage rates from January 1, 1971 until January 4, 2015. The shaded areas represent recessions. From this information you can see how low mortgage rates were in the 1970s and how high they reached during the housing boom.
During times of economic crisis, mortgage rates are typically very low. People who were not ready to buy a home during this time may be incentivized to purchase now . During boom years with good employment rates, people are financially secure enough to make large purchases like buying a house. If you are interested in buying a house now, it may be wise to check your credit score for free on sites like Credit Karma. The lower the rate the better, but don’t let fear of rejection hold you back if you have solid credit history!
Although interest rates are much lower than they were in the past, unprecedented low rates make it possible for many first time buyers to afford their own home. Rates are currently the lowest they have been in decades, but it’s impossible to predict where they will go from here. Keep an eye out for future updates on mortgage calculator tools as well as buying strategies!