Good news for buyers (and sellers) – 30 year mortgage rates are still low – they have been hovering around the 5% mark pretty much all year.  Currently, the rate is just below 5% – which means you can buy a 30-year fixed mortgage of $600,000 for approximately $3,200 per month – that’s not bad.  Basically, for every $100,000 worth of mortgage you pay a bit more than $500.  Of course, there are fees involved – typically up to 1 point – or 1% which is paid to the mortgage broker for their services.  Other fees include those for escrow and title services and those can add up to another 1% sometimes in fees.  These mortgage fees are a write off on your taxable income (check with your accountant for specific scenarios.)

Last year at this time mortgages were averaging 6%.  The Federal Reserve has pumped $1.25 trillion into mortgage-backed securities to try to lower rates on mortgages and loosen credit.  Rates on 30-year mortgages usually track yields on  long-term government debt. 

So, if you wanted to buy a house here in the Hollywood Riviera that cost $850,000 – and you had $250,000 to put down – you would need a $600,000 mortgage to consumate the deal.  If you could get that 30-year fixed mortgage at 5% (see above example – your payment would be approximately $3,200 per month (+ taxes and insurance, of course)  VS. that same mortgage at 6% or $3600 per month – as you can see there is a $400 difference every month or $4800 per year.  That can make the difference between buying a house or not for some people.  So this year vs. last year is all good for you if you’re a buyer – lower prices for the home you are buying along with a lower price for the mortgage as well!