Qualified Colorado Springs homebuyers just got another reason to search the Colorado Springs real estate MLS: new low interest rates of 3.54 percent on 15-year fixed-rate mortgages. Analysts believe that is a record low, according to an Associated Press story on August 4, 2011. Click here for more information about neighborhoods of Colorado Springs real estate for sale.
Nothing comes free, however. Borrowers will have to pay 0.7 point for the new low rate. A point equals one percent of the mortgage amount. Points are prepaid interest amounts. If buying a Colorado Springs home for sale with a $500,000 mortgage, one point equals $5,000. So, the 15-year fixed rate of 3.54 percent requires 0.7 point or $3,500 interest prepayment. For a $250,000 mortgage, it would be half of that, or $1,750 upfront. The rate was 3.95 percent a year ago.
According to Freddie Mac’s chief economist Frank Nothaft, the weak economy is also driving down the price of the 30-year fixed-rate mortgage to the lowest level seen this year. It is 4.39 percent, down from 4.49 percent a year ago. Buyers need to pay an average 0.8 point for that rate.
In addition, Market Watch.com on August 4 reported that the 5-year Treasury-indexed hybrid adjustable-rate mortgage fell to 3.18 percent. The required point is 0.5. That rate is down from 3.63 percent a year ago.
A more impressive savings is on the table for homebuyers who take advantage of the 15-year fixed-rate instead of budgeting for the smaller payments of a 30-year product. For a $250,000 mortgage using the 30-year fixed-rate of 4.39 percent, a total of $200,151.70 interest will be paid over the life of the loan. Adjusted for the tax deduction, it is still a substantial amount. Choosing the 15-year fixed-rate mortgage at the present 3.54 percent interest, the buyer pays only $72,581.81 in interest over the life of the loan.
In his news release, Nothaft explained that the housing market is improving. “Real residential fixed investments added growth to the economy in the second quarter.” He cited the CoreLogic National Price Index. It rose three months in a row for the first time since June 2010 and pending home sales are up nationally.
Contact award-winning Colorado Springs Realtor®Ann Heiring of RE/MAX Advantage, Inc. at (719) 440-1010 or Toll Free at (800) 246-8978 to find out how our acclaimed city can work hand in glove to help you achieve your lifetime real estate goals. Ask about our military discount.