What are interest rates doing today? That question has been popping up a lot lately, and it’s given rise to all sorts of others:
- Is it a good time to refinance?
- Is it a good time to pay off your student loans or consolidate your debts?
- Is it a good time to get rid of that Ygrene loan you never should have applied for?
Well, there’s a lot to unpack there, and because it depends on your specific situation and needs, I can’t provide a simple yes or no answer. My first bit of advice, though, is to speak with your mortgage professional. Only then will you know what options are available to you and how each of them will affect your interest rates.
Years ago, Fannie Mae and Freddie Mac with their conventional loans along with the FHA and VA with their respective loan options came out with something called ‘risk-based pricing.’ This methodology has shaped the way these financial institutions handle consumer rates ever since.
You know those advertisements you see announcing interest rates that are too low to be true? Once you squint your eyes and read the fine print, you’ll see the actual requirements: a minimum credit score of 760 or a minimum $300,000 loan amount for a single-family home. You might also see a 1% origination fee.
I liken this to the commercial featuring a salesman talking incomprehensibly fast. In both cases, you must always make sure to understand your terms and requirements first. Using the example above, if your credit score is, say, 620 or 680, your interest rate won’t be the same as it would be at the 760 mark.
Ultimately, your rate will vary based on a host of factors. Maybe you’re refinancing as opposed to purchasing, you’re buying an investment property as opposed to a primary residence, or you’re putting down 20%, 10%, or 5% versus the full 30%. And of course, the type of loan you’re applying for makes a difference as well.
The bottom line is that there’s no one-size-fits-all answer and our current low-rate environment means different things for different people. It all boils down to what your objectives are.
If you have any questions about today’s interest rates or any mortgage-related questions, please reach out to me and my team. We look forward to hearing from you!