The Double Comma Club

The Double Comma Club header image 1

15 Year Mortgage Rates are at a Historic Low

July 30, 2021

1200x600-tdcc-20210802-15yearlow.png

Welcome to another episode of the Double Coma Club with your host Nicole Ruth of the Ruth team. The number one lending team in Colorado. 

I want to share with you that we just hit another historic low in interest rates. 

Really, that's what I'm thinking right now as I'm processing what just happened to the 15-year fixed. Now if you remember, we hit the historic lows 17 times last year into this year on the 30-year fixed. Now the 30-year fixed didn't hit and hold time historic low. 

But the 15-year did in fact. It's lower than it was during that entire period of time. It just hit per Freddie Mac, 2.12%. Now Freddie Mac does typically have a point 8% discount on many of its loans as it does a national survey. So 2.12 is the national survey with .8 in discount. So what's point? 

8 So if I have a $300,000 loan, 1% discount is $3000. If I have a 8.5% discount, that would be $1500, so it's a percentage of the loan. So in this case 2.12. If I pay 1.1 full point in our case of $3000. 

My team can get you 1.99. It didn't have it two in front of it. It has a one in front of it and you can easily buy down to lower to 1.75. Why not just get 1 1/2? This is free money. But it's on a 15 year now. 

Quote and I wanted to share that with you because it's sexy and it's a great rate, but so is the 30-year right now for that same one-point discount, you can get downed it 2.625. I mean, that is fantastic. If you have not refinanced yet. 

Or you're looking to purchase. You need to talk to us now. It all depends on your credit score. It depends on how much you're putting down. It depends on how many units you are doing or whether or not you're doing a purchase or refinance or cash out refinance. 

As an investment, a primary home or second home? I mean, so this the interest rate that's publicized is 25% down. Great credit, a purchase, maybe a rate and term refinance on a single-family unit, so there's a lot that goes into that. Remember, they're going to show you their best rate for the best. 

A situation or scenario so definitely give us a call, but I want to show you these numbers quickly because it's important to me because I'm a huge fan of the 30-year fixed rate. But the 15? Is a one in front of it and I get that and I just want to show you the numbers so that. 

You have clarity on what are you giving up. If you lock for 30 year or if you lock for 15 year and so I put these numbers down on this chart and I want to go through this chart with you really quickly. So if I'm. 

Doing, let's say a $400,000 purchase $300,000 loan amount, I put 25% down. 

I can have these two options. I can have a 15-year fixed at 1.99% or the 30-year fixed at 2.625, both with a 1% discount. So in this case, $3000 to buy that rate down. 

In both of these situations, the principal and interest portion of this payment is right here next to it, so it's the 1929 for the 1.99 on a 15-year fixed or the 12:05 for the 30 year. So the difference is 1205 versus 1929, so a little over $700.00. Between those two payments and people often talk about that and they think it's double. It's not double, but it is a jump. So can you budget for an additional $700.00 to get the sexy? 

Great well what if you can't? What if you just lock in at a 2.625 and I'll tell you I'm a big fan of the 30 year fixed. I have all of mine on 30 year fixed and then I pay them like 15 because life happens and what if I need to keep that $700.00 for something else or whatever if I want to invest it in something else then I have options. 

But the difference between the total payment this 300 and $47,000 number, that's how much you would pay if you did a 15 year loan, so only $47,000. Interest the total outgo is 433 thousand. If you're doing a 30 year fixed, so it's 100 and $33,000 of interest. 

That's a significant spread between the 15 and the 30, but what if I take that 30 year and I pay it like a 15? So I paid the extra $700.00 every single month at the 2.625 rate. Well then I get so close that now the difference between 347 total out. No, right, that's principal and interest. That's how much I'm going to pay if I sum up all my monthly payments over the 15 years versus 367 thousand. 

Now it's just a $20,000 difference over the period of 15 years, and I know $20,000. Is not cheap. I mean that's a car, right? But $20,000 / 15 years to have the ability to control my cash flow on those months, when maybe I need that $700.00. 

But it also goes to show if I can budget it and if it makes sense then it is an option, right? 

It's a valid, very profitable option when I'm only spending $47,000 in interest, so I just wanted to make sure that you understood kind of differences. What you give up and what you gain when you go to. 

A 15-year fixed. If you have any questions about what your rate would be today given these historic lows, you need to give us a call, especially if you've been hiding under a rock. 

And you haven't refinanced. Yet it happens. I totally get it. Then give us a call. Let's get you taken care of this weekend.