NEW YORK (MainStreet) -- Talk about manna from heaven. Fifteen-year mortgage rates are down near 3%, a historic low, and at the same a great opportunity for U.S. homeowners to pay down their mortgage debts early, and at a bargain-basement interest rate in the process. How long can the low rates last?
From index to index, the 15-year rates do vary.
Compare those rates to early March 2010, when the 15-year rate, as measured by BankingMyWay again, was at 4.95%, and the 30-year fixed rate mortgage stood at just more than 5%.
Lower rates enable homeowners to pay less each month for their home mortgages, while taking on a 15-year mortgage accelerates the rate at which you can pay down that mortgage. Right now, economists say it’s an ideal time to save a huge chunk of cash by embracing both the low rates and the 15-year mortgage.
"With these historically low rates and declining house prices, the typical family had more than double the income needed to purchase a median-priced home in January, according to the National Association of Realtors Housing Affordability Index which registered the highest reading since records began in 1970," said Frank Nothaft, vice president and chief economist at Freddie Mac, in an official statement Thursday.
"In fact, the Corelogic National Home Price Index fell for the sixth consecutive month in January to the lowest level since January 2003,” he adds. “This high level of affordability likely contributed to the recent two-week rise ending March 2 in mortgage applications for home purchases."
Let’s take two scenarios – a 15-year, $300,000 mortgage at a 5% rate and the same mortgage at a 3% rate, and run them through the BankingMyWay Mortgage Loan Calculator. How much can you save with the lower rate?