What Do Lower Mortgage Rates Mean For You?

Mortgage rates DROP to lowest level since July 2023

If you’d been thinking of buying your very first house this year, the rising interest rates might’ve caused you to put your househunt on hold.

A higher interest rate = a higher monthly payment, which affects affordability at a time when gas prices, groceries and other necessities are extraordinarily high.

But, this week, we saw:

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 7.07% from 7.17%, with points falling to 0.59 from 0.60 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association. That was the lowest level since July.

Read the full article here.

In basic terms, this is a huge drop in interest rates!

This sudden shift is making waves in the world of South Jersey real estate, and we're here to break it down for you.

In this post, we'll explore what this rate drop means for you as an aspiring buyer.

Affordability 🏡

There’s no easier way to explain how this could impact your affordability than by running the numbers, so we asked Al Bucchi of Crown Home Mortgage to talk us through the monthly savings when buying a property for $350,000.

In this example, you’re putting down 5% on the property (a downpayment of $17,500).

As a first time buyer, your loan officer has found you a mortgage rate of around 6.8% on December 14th 2023.

Running the numbers, this would bring your monthly mortgage payment (excluding taxes and insurance) to around:

✨$2,180 PER MONTH✨

To put this in perspective, just two month ago mortgage rates were around 8%, and your monthly mortgage payment at that point would be about $2,440.

This newer mortgage rate means you pay $260 a month less in this example!*

(*This is an example interest rate. Your own interest rate could be higher or lower depending on your credit score and other variables — always speak to a mortgage lender so you know your affordability and interest rate!)

This is even more impressive when you look at your savings over a year — in this example you save $3,000 annually. That’s incredible.

If you tried to obtain pre-approval for a property in the last few months only to find it is unaffordable, there’s a chance with these lower rates you can now get that house.

MORE BUYING POWER 💪

With lower rates, you now can get more house for the same money.

If you were pre-approved for a mortgage payment of around $2,500 (excluding taxes and insurance) back when rates were nearer 8% for a $350,000 house…

…that same amount with a rate at around 6.8% could get you a house worth $375,000!

That means you have $25,000 more purchasing power (based on this example) than you did a couple months ago!

If you’ve been wondering when is the best time to buy a house, now might be the time.

NOW, ARE YOU READY TO EMBARK ON THIS THRILLING JOURNEY WITH JFKLIVING?

Contact The JFKLiving Team and we’ll be honored to navigate you through this market 🦄🤘

We’ll point you in the direction of a hyperlocal vetted mortgage lender who can run the numbers with you to see how you can save money with this new rate.

Got questions? Give the team a call at 856-669-4560.

We’re here to help you #makeJerseyhome.