By Shannon Petrie, FrontDoor.com | Published: 9/12/2008
At 5.93 percent, down from 6.35 percent in the previous week, rates are at their lowest level in five months.
With banks less willing to take risks on loans these days, only borrowers with excellent credit will qualify for the lowest rates. However, for potential homebuyers who do qualify, these lower rates could mean significant savings on monthly mortgage payments.
"Interest rates for 30-year fixed-rate mortgages are down almost 0.6 percentage points over the past four weeks," Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. "Therefore, the monthly principal and interest payment on a new $200,000 loan is down by more than $76 from a month ago."
For borrowers who can't quality for the lowest rates, there are a few options available to save money in the long run:
Lower mortgage rates are also causing an increase in refinancing activity. Many people expecting their adjustable mortgage rates to rise in the near future are looking to secure a low rate by refinancing to a fixed-rate mortgage.
Whether these low rates will endure is uncertain. Some analysts believe they will begin to rise again if the government has to borrow money to finance Fannie Mae and Freddie Mac.
Interest rates have crept up, but refinancing may make sense for you.
Purchase price, interest rate, taxes and PMI determine your monthly payment.
Find out if owning a home will save you money.