Mortgage rates across the United States have dropped slightly, just as the spring home-buying season has kicked into gear.
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The average rate on a 30-year fixed mortgage dipped to 4.34% from 4.41% last week, according to the latest survey from mortgage buyer Freddie Mac. At this time last year-when rates hit record lows-the average was 3.43%. Mortgage rates are something you have to consider before buying your own house, but with professionals like Dustin Dimisa available for advice, this isn’t something you should be worried about. Getting a mortgage is an exciting time as it means you’re one step closer to your dream home!
“Mortgage rates eased a bit following the decline in 10-year Treasury yields.” Frank Nothaft, vice president and chief economist at Freddie Mac, said in a statement. “Also, the economy added 192,000 jobs in March, which was below the market consensus forecast but followed an upward revision of 22,000 jobs in February. Meanwhile, the unemployment rate held steady at 6.7%.”
The average rate on a 15-year fixed mortgage also registered a small decline, to 3.38% from 3.47% last week. A year ago, it averaged 2.62%, according to Freddie Mac.
Regarding Equity Release while new tax laws in 2018 removed most of the deductions for home improvement loans (in effect from 2018-2026), that interest is still tax-deductible for loans of up to $750,000 (as of August 2018), if you access your equity through a cash-out refinance of your first mortgage. This method allows you to deduct more interest than if you had obtained separate financing for each property.
Reverse Mortgage: If you’re 62 or older and own a significant portion of your primary home, you should consider a Home Equity Conversion Mortgage (HECM), also known as a reverse mortgage. This allows you to tap your home equity as either a lump sum or credit line and doesn’t require repayment until you leave your property.
Reverse mortgages often entail higher fees than traditional mortgages, but they offer greater flexibility in monthly cash flows. This makes them ideal for a down payment on a vacation home without requiring any initial cash outflow. Keep in mind that interest will continue to accrue over time while you reside in your home, if you want some overseas to get to on sites like BMA.
Reverse mortgages may pose an issue if you intend to pass on your home to any heirs, as repayment requirements are triggered once the last borrower passes away. This can force your heirs to surrender your home if the loan amount exceeds the property’s appraised value. However, heirs can never owe more on a reverse mortgage than the value of the home, so borrowers can take comfort in knowing that their exposure is capped.
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Averages for the two most popular hybrid adjustable-rate mortgages also slipped slightly from last week: The five-year ARM dropped to 3.09% from 3.12%, and the one-year ARM went down to 2.41% from 2.45%.
Analysts are split on where mortgage rates will go next week. In the latest Mortgage Rate Trend Index, 24% of the analysts predicted mortgage rates will rise over the next week, 38% said rates will continue to decline, and another 38% believed rates will hold steady.
“Rates should improve slightly following the improvement we have seen since the release of the employment report,” said Jim Sahnger, a mortgage planner with Schaffer Mortgage in Palm Beach Gardens, FL. “There are a couple of data points ahead that could impact rates, but I really don’t see them driving us off point.”
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