Like many other undervalued markets nationwide, Houston has come out of the Great Recession with booming real estate prices. As of August, 2014, the average sales price in Houston had increased to $275,369, a 6.4 percent year-over-year gain. What has always been an affordable housing market has suddenly become a competitive one.
This is great news for existing Houston homeowners, who are beginning to realize equity in their property. And because home loan rates are still historically low, it is also good for prospective homeowners. Low rates let you afford more house, while the seller’s market gives you confidence in your purchase.
What Does That Mean, Historically Low Rates?
Home loan interest rates have been low for years now as this graph illustrates. Although the daily rate fluctuates, making it impossible to be specific about where home mortgage rates will be tomorrow or next week, one can certainly generalize about rate trends.
Rates have dipped lower for brief periods during 2012 or 2013, but right now they are less than one percent point higher than their all time low. At the same time, the inflation rate this past year alone was 1.6 percent. Thus, when adjusted for inflation, mortgage interest rates are hovering at an all-time low.
Why Do You Benefit from Low Rates?
Low rates benefit everyone. They make it financially advantageous for existing homeowners to refinance their existing loan either to cash out equity or change the terms of their home loans in order to build equity more quickly.
For a home buyer, low rates mean being able to afford a house that is considerably more expensive than they would otherwise be able to finance.
Here’s the reason. Your monthly loan payments are calculated based on the interest rate. A $200,000 loan will have a payment of $1,073.64 when the interest rate is 5 percent; at 4 percent, that monthly payment drops to $954,83. This difference can mean getting into a neighborhood you might not be able to afford if the rates were higher.
Interested in Taking Advantage of Today’s Low Rates?
Mortgage Loans for Texas has a proven reputation for fast loan processing, and our customer service is second to none. We work hard to make sure you get the best possible deal on your home loan.
If you want to hear more about home loans and refinancing options, please contact Corey or Damon today.