Mortgage rates drop by about 2%

Dec. 30—JAMESTOWN — Mortgage rates have dropped by approximately 2%, which is good news for those who are looking to purchase homes, according to Michelle Neumiller, mortgage loan officer and assistant vice president at Gate City Bank in Jamestown.

Neumiller said the 30-year fixed rate had been in the higher 6% but Gate City Bank's general rate on a 30-year fixed mortgage was at approximately 6% as of mid-December.

"That rate, though, it's pretty specific to the home borrower because credit score and loan to value will adjust that general rate for the homebuyer," she said.

The reduction in mortgage rates means a homebuyer's purchasing power is higher, said Ross Powell, incoming president of the High Plains Association of Realtors and real estate agent with RE/MAX Now. He said a $200,000 home might be out of reach for some homebuyers when the rates are much higher but if mortgage rates are lower, a $250,000 home might be attainable for some.

"That swing in purchasing power is huge," he said, referring to the lower mortgage rates.

With a 2% drop in mortgage rates, a homebuyer could save about $97,000 over 30 years on a $200,000 home, Neumiller said.

"Ultimately, the rate is specific to each customer's situation and dependent on multiple factors such as credit score, the down payment amount and loan-to-value," she said.

Neumiller said being a first-time homebuyer will also impact the mortgage rate as well.

She said homebuyers will still need to work within their budgets for homes when deciding if they should do a fixed-rate or adjustable-rate mortgage.

"Those types of financing are the same basically," Neumiller said. "So maybe where's the better rate? Sometimes in the past, the adjustable rate has been lower than like current market conventional rate. So that was the option to look at with the customer knowing, 'Hey, let's watch the rate and get that and maybe refinance into a fixed rate before it becomes variable.'"

Neumiller said homeowners with mortgage loans will want to make sure there isn't a penalty for early payoff if they are considering refinancing.

"It takes about a percent in that rate for it to make sense to refinance," she said.

Neumiller said potential homeowners should work on their credit scores, save money for a down payment and have a good employment history when they are considering purchasing a home.

"Job security, length of employment can be a key thing as well, not so much with the rate but just with getting approved," she said.

She said potential homebuyers should start a conversation with a lender and look to get preapproved for a certain amount. Being preapproved will help a homebuyer purchase a home faster when a house is newly listed, she said.

"Gate City Bank offers a 90-day fixed-rate lock and a 180-day adjustable-rate lock while you look for a home," Neumiler said. "If rates drop before you close on a home, you can change your locked-in rate to the new rate so that's an additional reason why this unique buying window is spurring people to do a free consultation with a local lender. It's another smart way to capitalize on these dropping interest rates we're seeing."

Powell said other factors potential homeowners need to look at when looking at houses include pricing for homeowners insurance, looking at all utility bills at each home and checking for information on property tax and special assessments.

"I am certain to let them know if they're in a flood zone because flood insurance costs money," he said.

Powell said the average price of a home varies depending on location and other factors.

"Valley City and Jamestown have kind of leveled off where you're not seeing those outrageous prices, but people are still getting a fair market for their home when they sell," he said.

The median listing home price in Jamestown is $219,000 and the median sold home price is $217,700 in Jamestown on realtor.com.

Powell said the drop in mortgage rates is also good for sellers.

"They could probably ask a little bit more and get it because it's competitive and affordable," he said. " ...I tell people to be cautious. If a house should be, per se $200,000, you're not going to be able to ask $240,000 for it just because the interest rates went down, but the chances of for sure getting the $200,000 and maybe even a little bidding war is possible when the rates get lower."