Now may be the right time to buy a home in Sacramento, CA. In the Greater Sacramento area, 44% of homes for sale had to lower their asking price, according to CBS News. Inventory is up and demand is down, resulting in some price relief.
Many buyers are on the sidelines due to the perception of high interest rates. Despite a recent increase, mortgage interest rates remain under 7%.
Read on to learn about current mortgage trends. Explore mortgage rates and home-buying tips in the Sacramento area that are certain to help you land your dream house.
Are Mortgage Rates High?
Many people believe that housing market rates are higher than normal. The truth is that today's rates remain on par with the historical average.
In 2008, the United States went into a period known as the Great Recession. There was a crash in the housing market and the global economy fell into a sharp decline.
To combat this tough economy, the United States Federal Reserve implemented a quantitative easing policy. They lowered the Fed's funds rate to historic lows. The goal was to inject capital into the economy and make borrowing cheap.
The result of this policy decision was a decade-plus of historically low mortgage interest rates. Especially after the Covid-19 pandemic, it was normal for home buyers to secure rates of less than 3% on a 30-year mortgage.
New borrowers do not understand how cheap rates are. In the period from 1970 to 2008, interest rates never fell below 5%. Historically speaking, a mortgage rate below 7.5% is low.
The point of this discussion is that mortgage rates should not deter you from buying. The fact that rates remain below 7% is an opportunity for historically cheap buying. If rates decline further, you can always refinance later.
How to Shop for Mortgage Interest Rates?
To do a mortgage rate comparison, you need to shop around. There are many lenders out there. You may be able to save one-quarter basis points through lender competition.
There are other ways to reduce your rate. You can pay points to secure a lower rate. This means you are paying interest upfront to save over the long run.
The best way to secure a lower rate is by taking out a mortgage with a shorter term. A 15-year mortgage carries less risk than a 30-year mortgage. Acknowledging this, the lender gives the borrower a lower rate.
In some cases, a variable rate can help you save on interest. However, the risk is that market conditions decline and your rate is increased by the bank.
Your Guide to the Mortgage Market
You are now ready to shop for the best interest rate for your new home. Don't let the mortgage rate market dissuade you from buying. The inventory and current demand make for a favorable buyer's market in Sacramento.
PMI American River has over two decades of experience navigating challenging real estate markets. If you want to learn more about mortgage rates, contact us at PMI American River to speak with an expert today.
