Housing – and all expenses related to housing – constitute in the district of 15% of that saving, according to the National Association of Home Builders. It is therefore not nothing that the housing market continues to be one of the only positive points in this economy.
The Commerce Department said on Tuesday that innovations in new homes continue to grow up 11% last month from a year ago, pending the inevitable revision. But while the monthly numbers are rebounding a lot, the general trend is upward. It’s all about low interest rates, which have made borrowing to buy a home cheaper than ever – at least if you can get those historically low rates.
This can be time consuming, because given the same set of facts, different lenders offer different deals. Suppose you want to refinance your home and are looking for a 30 year fixed rate mortgage. A search using an online aggregator, which aggregates a bunch of different loan offers, can result in a loan with an interest rate of 2.5%, but $ 3,500 in fees. Another offer could come with a higher rate of 3.62%, but at no cost.
What is behind the wild variations?
“Particularly this year, with a lot of volatility in the financial markets, many lenders are facing different economic circumstances, we have seen the rate variation in our survey widen a lot,” said Len Kiefer, deputy chief economist . at Freddie Mac, which calculates the average rate on a 30-year mortgage at 2.81%, with a commission of 0.6%.
Some of these circumstances include the cost of borrowing from a lender, the efficiency of the company’s technology, or the number of employees it has.
Another factor, said Tendayi Kapfidze, chief economist at LendingTree, may be “if a lender has a large office in an expensive neighborhood, they will have to cover that cost with the profits from the mortgages.”
Sometimes they are just trying to set their sales quotas.
But lenders won’t let you talk about all of this. They may still offer you a low rate, but charge you a lot of fees.
It’s one of those times when it really pays to shop around, said Greg McBride, chief financial analyst at Bankrate.
That time invested, he said, “generates a great return on your investment, when you are able to reduce the lending rate by a quarter or a half of a percentage point that you would otherwise have gotten.”
And getting the best rate may require you to pick up the phone.
