Build equity fast with a 2.99%, 15-year home loan
Dollar Bank is offering one of mid-summer's best nationally available deals on a 15-year, fixed-rate home loan.
It's charging just 2.99% with no points and around $1,500 in lender fees (fees for this loan vary by scenario). That's nearly half of a percentage point lower than the current national average of 15-year loans – 3.41% according to our latest survey of major lenders.
It's also very close to what you would have paid for one of our favorite deals in June, when Liberty Bank for Savings was offering 2.99% on a 15-year with no points and around $800 in fees.
Of course, that deal was only available to borrowers in the Chicago area. You'll find this one from Dollar in parts of Pennsylvania and Ohio.
Can you find a similar rate in your neck of the woods? Click here to compare this deal with the best mortgage rates from scores of other lenders in your area.
These shorter-term loans are a popular product among borrowers out to refinance their home and save tens of thousands of dollars in interest by paying off their loans more quickly.
See how much interest you'd save by paying off your home loan early using our 15-year vs. 30-year mortgage comparison calculator.
The biggest drawback to short-term loans is that the monthly payments are higher. For this loan, the principal and interest payment would be $690 a month for every $100,000 borrowed.
You can use our mortgage calculator to determine the monthly payments for the amount you want to borrow with this or any home loan.
It will also provide a month-by-month amortization schedule that shows how much you've reduced your debt and how much you still owe if you want to pay the loan off.
Dollar Bank (www.dollarbank.com) is headquartered in Pittsburgh, Pa., and enjoys an A+ rating from the Better Business Bureau.
This loan is available for purchase or refinance in Pittsburgh, southwestern Pennsylvania, Cleveland and northeastern Ohio. It comes with a 60-day rate lock period.
To qualify for this loan you must:
- Be applying for a loan under $417,000.
- Have a credit score of at least 740.
- Have at least a 20% down payment.
- Have at least 20% equity in your home if you are refinancing.
- Have 30 days of prepaid interest.
Home loans were expected to become more expensive this year because the Federal Reserve is gradually ending its campaign to drive long-term interest rates, including mortgage rates, to record lows.
In September 2012, the government-controlled bank started buying up $85 billion of debt per month, split between Treasury bills and bonds backed by home loans.
By flooding the mortgage market with money, it pushed the cost of home loans to record lows in an attempt to boost real estate sales and property values battered by the recession.
With the economy on the mend, the Fed began reducing those purchases this year, buying only $75 billion in January, $65 billion in February and March, $55 billion in April, $45 billion in May and $35 billion in June and July.
According to minutes from the Fed's last policy meeting, it's planning to buy $25 billion in August and September, $15 billion in October and then bow out of the bond market in November – unless, of course, we're confronted with some new economic catastrophe.
So why are mortgage rates defying all expectations?
The major reason is that the demand for mortgages – and the money behind them -- has truly cratered.
Millions of homeowners leapt at cheaper mortgages when interest rates were falling and now the boom is over. Refinancings are down about 60% this year.
Home sales are flat and it now appears that the number of mortgage originations for purchases will also fall this year, although by a more modest 9%.
But that's why lenders only issued 226,000 mortgages for one- to four-family dwellings during the first three months of the year -- the fewest since the second quarter of 1997.
It's also made the Fed's withdrawal from the mortgage market more or less irrelevant. The money it's been providing simply isn’t needed to fund the relatively few new loans being written.