According to a recent Star Tribune article and many other news sources, the current 30 year fixed mortgage rate is 3.6%, the lowest average in 3 years and nearly a whole percentage point lower than a year ago. For homeowners with a higher interest rate, now may be a prime time to consider refinancing. A lower mortgage rate can provide homeowners huge cost savings from month to month and especially over the life of the loan, making the cost of refinancing (i.e. broker fees) worth it. The article cites some pretty compelling figures; 183,000 homeowners in the Twin Cities qualify to refinance at the current rates vs. 20,000 last November and 31,000 August last year. The average savings per month would be $259, which amounts to over $3,000 savings in a year and nearly $100,000 over the life of a loan. Those figures are based on average mortgage size and rate. Another more specific example in the article: for a mortgage on a $250,000 home with a current rate of 4.5% (which was the rate at the start of the 2019), the savings would be closer to $130 per month and $47,000 over 30 years. The potential cost savings are enough that homeowners should look at what their current rate is and contact a mortgage broker to explore refinancing.
While lower mortgage interest rates would traditionally entice more homebuyers to enter the market, the low inventory of entry-level homes lessens the appeal. As detailed in this other article, median sales price has consistently reached record-level highs over the past several months, although overall home sales are down. The article cites a couple reasons for the sky-high median home price of $290,000 (in June). First off, the increased competition and bidding wars on entry-level homes would naturally drive up the price (as has been the case for the past several months). Additional interest and sales activity for the more expensive upper bracket homes, however, has also contributed to the rising median sales price.
In this market especially, finding and buying the right home may boil down to who you know. The right Realtor can give you “ins” on properties, including pre-market showings and sales, which in many cases, could keep you out of a bidding war situation. Make sure to follow us on Facebook and Instagram to get early looks on upcoming listings.
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