Thursday, August 27, 2020 / by Todd Dawes
While the details are unclear and likely require points to be paid, United Wholesale Mortgage started advertising a rate lower than 2% for a fixed-rate, 30-year loan. Remember when 3% mortgage rates seemed low? Last week, Freddie Mac reported a new record low average for the 30-year fixed rate mortgage: 2.88%, but United Wholesale Mortgage (UWM) now wants to take rates even lower – nearly a full percentage point below Freddie Mac’s all-time low.
UWM is touting a loan program that allows borrowers to lock in rates as low as 1.99% for both home purchases and refinances. It is very important to work with a real estate and mortgage professionals that will guide you through the process of finding the right home in the right location with the right lender.
The rate is available only through independent mortgage brokers, the company said in its announcement this week, but other lenders may be tempted to follow suit to compete.
“I never thought I would see a rate starting with a ‘1,’ but I also never thought I would see a worldwide pandemic – and that’s what it took,” says Matt Rasetta, owner of Superior Rate Mortgage of New England. “It means mortgage brokers like me are going to make a lot of money because so many people will refinance, but it’s the silver lining of a not-too-great situation for the rest of the world.”
So, how feasible is it to get a mortgage rate under 2%? UWM has released limited details so far on qualifications to snag that 1.99% interest rate. UWM is also offering 15-year fixed-rate mortgages as low as 1.875%, for which the company is requiring a FICO score of at least 640 to qualify. The low rates are only for owner-occupied properties.
The Motley Fool theorizes that borrowers will have to pay more up front in closing costs and points on their mortgage to get rates below 2%. With mortgage points, buyers and refinancers essentially pay a fee at closing to the lender to snag a lower rate.
Borrowers interested in the ultra-low-rate mortgage should check how much they’ll be required to pay upfront in points to know whether a 1.99% rate is truly the best deal for them. Financial experts usually advice borrowers to figure out how long they plan to stay in a property to determine if it’s worth paying those upfront points.
If you’re wondering if now is a good time to sell or buy in your specific situation, we can provide you with accurate information and assistance during your home buying or selling venture. We offer free virtual consultations to review your specific circumstances. Simply email us at liz@DawesTeam.com or call 954-240.9680 We look forward to figuring a best plan for you.
Source: “UWM Announces 1.99% Rate for 30-Year Fixed Mortgage,” HousingWire (Aug. 11, 2020) and “This Lender Just Launched a 1.99% Mortgage,” The Ascent/Motley Fool (Aug. 12, 2020)