November blows home buyers incredibly cheap mortgage rates
With home prices down and mortgage rates near record lows, fall has turned into a once-in-a-lifetime opportunity to get a great deal on a house or condo.
The average interest rate of every type of home loan we track has set new record lows this fall. Click here to find the results of our most recent weekly rate survey.
Find out how much home loans cost in your area by searching our extensive database of the best rates from hundreds of lenders.
Lenders in many markets are offering 30-year, fixed-rate home loans for as little as 3.875% with no points and application fees of less than $2,000. You should be able to find a mortgage for no more than 4% in most cities.
The principal and interest payments on such a home loan would be about $477 for every $100,000 borrowed.
Use our mortgage calculator to see what your payments would be for any fixed-rate loan.
If you're a renter, now is the best time in decades to take the plunge into home ownership.
Before the housing bubble burst, renting was the better financial deal for many Americans. But today's incredibly cheap loans, low home prices and rising rents have combined to tip the scales in favor of buying.
In October, economists at Capital Economics reported that median rent and monthly home loan payments were roughly the same for the first time in three decades.
And in its most recent rent versus buy index, the real estate website Trulia.com noted that buying a home is cheaper than renting in 74% of major U.S. cities.
Among the top places where buying trumps renting: Las Vegas, Detroit and Mesa, Ariz. It's still cheaper to rent in cities like New York, Seattle and San Francisco.
Of course, community-wide data can't replace your own comparisons. That's where our rent vs. buy calculator comes in.
This calculator will help show you the full cost of owning a home, not just what is reflected in your monthly loan payment.
It lets you factor in what you'd pay up front in down payment and closing costs and what you'd pay going forward for homeowners insurance, property tax and maintenance. It also shows you how much you'd benefit from a home loan interest tax deduction.
Use this calculator to determine if the house you've got your eye on -- given all you'll pay and the tax benefits you'll earn -- will cost you less than you're paying in rent today.
"Now is a great time to buy because your dollars will go further," says Chantay Bridges, senior real estate specialist and licensed Realtor with Clear Choice Realty & Associates in Los Angeles.
Not only can you purchase a home and have the same monthly loan payment as what you are paying in rent, but that great neighborhood that used to be out of reach might now be in your price range, Bridges says.
Your monthly payment might even be less than what you'd pay in rent, particularly if you buy a vacant home. And there are plenty of those given the number of homes in foreclosure.
The nationwide median rent for vacant rental properties in the third quarter of this year was $700 a month, while the median asking purchase price for vacant property was $136,000, according to the U.S. Census Bureau.
Assuming you'll pay an average of 4.3% for a 30-year, fixed-rate loan -- roughly what our survey has found this fall -- and a 20% down payment, your monthly payment would be about $538, or about $162 less per month than the median rent payment.
These median rates differ by community and region.
No matter how good of a deal buying appears to be, don’t forget the basics:
- Safety and quality schools support home values in any market.
- Spend no more than 25% to 30% of your pretax income on housing and no more than 36% of your pretax income on debt payments (that means your mortgage plus credit card, auto, student and other loan payments).
- Have a significant rainy day fund to cover home repairs, household emergencies and possible unemployment.