The good news is that if you’re watching this video in 2021, mortgage rates are as low as they have been in history. But the bad news is that houses are now being sold like ice cream. Which a lot of people are having to offer more than the house is worth just to get their offer considered.

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1. How are Interest Rates Set for home Loans
– The answer to this questions is that is based on a few factors
– Factors like when the Fed cuts interest rates, which allows banks to borrow a lower rates which then allows them to lend money a lower rates
– It can also be affected by the economy, politics, and also mortgage-back bonds

SO overall;
– There are a few factors that affect mortgage rates
– And just 2% extra could take You from affording a house to not being able to make a payments
– So that’s why you usually want a fixed-rate mortgage that cant be changed unless you refinance, instead of getting a variable rate mortgage and being put at risk of default

Crazy numbers:
– 1981 the highest rate was about 18.63%
– Lowest rate was in 2.65% back in January of 2021 ( that’s crazy)

2. How much Money a Bank Makes in total
– Now when you’re getting ready to buy a home ( before closing )
– You can request to ge a loan estimate letter
– This letter will tell you all the information you need to know

For example:
– How much you will pay interest
– Your monthly payment
– And how much the banks make and more

3. How it affects your Monthly payments
– Here is where things get interested
– Let’s use a simple example
– Of someone that gets a loan for 3% a low rate 5% ( just a 2% difference and let’s see how that effect your loan)

The calculator I use: Mortgage Calculator bankrate
– The average home In 2020 sold for nearly $400k a lot of money of you ask me ( a scary amount )
– But lets you found a home for $300k
– 3% is $1,220 and 5% would be $1,554 ( extra $334 for 30 years = $120k)

4. What a 2% difference could mean over the loan term
– Just with that 2% difference they make $270k and almost double their money
– At 3% you would have only paid them $150k, which saves you 120k
– So the interest you get matters a lot

Tip is this:
– To save more, put down 20%
– Get the house on a 15-year mortgage
– Pay and 15% of your income towards it
– 3% is 27k vs 5% 71k instead 0f 270k

5. How to get better rates
– Have good down payments
– Pay your bills on time
– And stay out of debt

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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