Sky-high inflation and mortgage rates have added an extra hurdle for many would-be homebuyers. If that’s you, the past few weeks have presented an opening.
According to Freddie Mac, the average rate for a 30-year fixed home loan went from 6.95% a few weeks ago to 6.78% for the week ending July 26. The average rate for 15-year fixed-rate mortgages also reached a recent low of 6.07%.
The rate has not risen above 7% for eight weeks now. But that number is still too high for many would-be buyers hoping for even lower rates.According to the St. Louis Fed, the median-priced home cost $412,300 in Q2 of 2024, down from $426,800. However, that’s still too high for many buyers.
Should you buy now? On a $300,000, 30-year mortgage with a 7% interest rate, you’ll pay $418,526.69 in interest alone over the loan’s lifetime, more than the total value.
With a $700,000 mortgage, the total interest paid over 30 years jumps to just under $1 million. With a 4% interest rate on the $300,000 loan, you’d pay $215,608.52 in interest and just over $500,000 on the $700,000 loan.
While rates under 7% are hardly a giant lifeline, with average home price appreciation, for many first-time homebuyers, getting a mortgage with those rates now is a better financial move than waiting possibly years for rates to drop to more favorable levels.
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