If you follow any lenders or real estate agents on social media you’ve probably seen lots of posts about rates being low. But what does that mean?
To answer this you will first need to know what rates are. They are the amount of interest or amount of money you pay to borrow money. Every month a portion of your mortgage payment goes towards the interest owed on your loan. So the lower your interest rate the lower your monthly payment
In the 1980’s the average interest rates for a home loan were in the teens. So when we say current rates are historically low, we mean it!
To put this in perspective, if you were to purchase a home for $200,000 in 1980 the average interest rate was 18%, so if you were to put 3.5% down on your loan your monthly payments would be $3200.
Now take the same $200,000 loan, same 3.5% downpayment, but use today’s rates of 3.5%. The monthly payment is $1150.
This is why today’s interest rates are such a big deal. Even if you purchased your home a few years ago you can still take advantage of these rates by refinancing your current loan