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Is a mortgage rate half a percentage point lower worth it? Here’s how much you’d save.
Homebuyers in the last few years haven’t had many great options. They could either purchase a home at today’s elevated interest rates (which hit their highest point since 2000 last summer) or they could sit on the sidelines and wait for rates to fall (and hope that prices would stay where they were). In this scenario, many buyers have looked for ways to secure a below-average mortgage interest rate.
Fortunately, there are a few ways to do this including the purchase of mortgage points and/or the use of an adjustable-rate mortgage. Before proceeding with either, however, buyers should first understand what they stand to save with a lower mortgage rate – even if it’s just half a percentage point below the average. Below, we’ll detail how much you could save by going this route and why it may be worth pursuing right now.
See what mortgage rate you’re eligible for here now.
Is a mortgage rate half a percentage point lower worth it? Here’s how much you’d save
On the surface, a mortgage rate that’s just half a percentage point lower than the average rate doesn’t seem to offer substantial savings. But while the savings won’t be huge each month they will add up over the year and decades to come, especially considering that the average mortgage loan term is set for 30 years. Using Bankrate’s mortgage calculator, here are three different rate scenarios that emphasize the savings potential (assuming a 20% down payment of $80,000):
- A 30-year, $400,000 mortgage at 7.29%: $2,191.00 monthly with the total cost of the loan being $789,603.
- A 30-year, $400,000 mortgage at 6.79%: $2,084.00 monthly with the total cost of the loan being $750,275.
- A 30-year, $400,000 mortgage at 6.29%: $1,978.00 monthly with the total cost of the loan being $712,747.
As can be seen in the difference between a 7.29% rate and a 6.79% rate, the buyer would save $107 each month and $39,328 over the life of the loan. That’s a substantial amount of savings that can be secured simply with a mortgage rate that’s half a point lower. So, for many, it may be pursuing now, even if rates are less than ideal.
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Why you should get a mortgage rate half a percentage point lower now
As the above calculations demonstrate, a mortgage rate half a percentage point lower will save you money each month and year, resulting in tens of thousands of dollars saved over the life of the loan. So, if you can secure a rate that much lower, whether it be via an adjustable-rate mortgage, mortgage points or simply by searching for the best lenders, it could be worth it for you now.
The context here is also important. Anticipation was high at the start of 2024 that a cut to the benchmark interest rate range – currently sitting at a 23-year high – was imminent. That would have naturally led to a cut in corresponding mortgage rates. But the inflation report for December showed inflation at 3.4%, significantly above the Federal Reserve’s 2% goal. And January’s report was better but at 3.1%. So more work needs to be done and interest rate cuts hoped for as soon as March may not now come until May or June, if not later.
All of this is to say that waiting and hoping for mortgage rates to be reduced may be fruitless right now. Instead, buyers ready and willing to act should strongly consider moving now, even if it means getting a rate just half a percentage point below today’s averages. As the above calculations show, that rate difference can still add up to significant savings over time. And when the rate market inevitably stabilizes, buyers can always explore their refinancing options at that moment.
The bottom line
Today’s rate climate isn’t ideal but there are still ways for buyers to save money. Adjustable-rate mortgages and mortgage points both offer ways to do just that. And while neither will result in the 3% to 4% rates from recent years, they can potentially lower your mortgage rate by half a percentage point or more, resulting in substantial savings for the months and years to come.
CBS News
Biden’s top hostage envoy Roger Carstens in Syria to ask for help in finding Austin Tice
Roger Carstens, the Biden administration’s top official for freeing Americans held overseas, on Friday arrived in Damascus, Syria, for a high-risk mission: making the first known face-to-face contact with the caretaker government and asking for help finding missing American journalist Austin Tice.
Tice was kidnapped in Syria 12 years ago during the civil war and brutal reign of now-deposed Syrian dictator Bashar al-Assad. For years, U.S. officials have said they do not know with certainty whether Tice is still alive, where he is being held or by whom.
The State Department’s top diplomat for the Middle East, Barbara Leaf, assistant secretary of state for Near Eastern Affairs, accompanied Carstens to Damascus as a gesture of broader outreach to Hay’at Tahrir al-Sham, known as HTS, the rebel group that recently overthrew Assad’s regime and is emerging as a leading power.
Near East Senior Adviser Daniel Rubinstein was also with the delegation. They are the first American diplomats to visit Damascus in over a decade, according to a State Department spokesperson.
They plan to meet with HTS representatives to discuss transition principles endorsed by the U.S. and regional partners in Aqaba, Jordan, the spokesperson said. Secretary of State Antony Blinken traveled to Aqaba last week to meet with Middle East leaders and discuss the situation in Syria.
While finding and freeing Tice and other American citizens who disappeared under the Assad regime is the ultimate goal, U.S. officials are downplaying expectations of a breakthrough on this trip. Multiple sources told CBS News that Carstens and Leaf’s intent is to convey U.S. interests to senior HTS leaders, and learn anything they can about Tice.
Rubinstein will lead the U.S. diplomacy in Syria, engaging directly with the Syrian people and key parties in Syria, the State Department spokesperson added.
Diplomatic outreach to HTS comes in a volatile, war-torn region at an uncertain moment. Two sources even compared the potential danger to the expeditionary diplomacy practiced by the late U.S. Ambassador Christopher Stevens, who led outreach to rebels in Benghazi, Libya, in 2012 and was killed in a terrorist attack on a U.S. diplomatic compound and intelligence post.
U.S. special operations forces known as JSOC provided security for the delegation as they traveled by vehicle across the Jordanian border and on the road to Damascus. The convoy was given assurances by HTS that it would be granted safe passage while in Syria, but there remains a threat of attacks by other terrorist groups, including ISIS.
CBS News withheld publication of this story for security concerns at the State Department’s request.
Sending high-level American diplomats to Damascus represents a significant step in reopening U.S.-Syria relations following the fall of the Assad regime less than two weeks ago. Operations at the U.S. embassy in Damascus have been suspended since 2012, shortly after the Assad regime brutally repressed an uprising that became a 14-year civil war and spawned 13 million Syrians to flee the country in one of the largest humanitarian disasters in the world.
The U.S. formally designated HTS, which had ties to al Qaeda, as a foreign terrorist organization in 2018. Its leader, Mohammed al Jolani, was designated as a terrorist by the US in 2013 and prior to that served time in a US prison in Iraq.
Since toppling Assad, HTS has publicly signaled interest in a new more moderate trajectory. Al Jolani even shed his nom de guerre and now uses his legal name, Ahmed al-Sharaa.
U.S. sanctions on HTS linked to those terrorist designations complicate outreach somewhat, but they haven’t prevented American officials from making direct contact with HTS at the direction of President Biden. Blinken recently confirmed that U.S. officials were in touch with HTS representatives prior to Carstens and Leaf’s visit.
“We’ve heard positive statements coming from Mr. Jolani, the leader of HTS,” Blinken told Bloomberg News on Thursday. “But what everyone is focused on is what’s actually happening on the ground, what are they doing? Are they working to build a transition in Syria that brings everyone in?”
In that same interview, Blinken also seemed to dangle the possibility that the U.S. could help lift sanctions on HTS and its leader imposed by the United Nations, if HTS builds what he called an inclusive nonsectarian government and eventually holds elections. The Biden administration is not expected to lift the U.S. terrorist designation before the end of the president’s term on January 20th.
Pentagon spokesperson Pat Ryder disclosed Thursday that the U.S. currently has approximately 2,000 US troops inside of Syria as part of the mission to defeat ISIS, a far higher number than the 900 troops the Biden administration had previously acknowledged. There are at least five U.S. military bases in the north and south of the country.
The Biden administration is concerned that thousands of ISIS prisoners held at a camp known as al-Hol could be freed. It is currently guarded by the Syrian Democratic forces, Kurdish allies of the U.S. who are wary of the newly-powerful HTS. The situation on the ground is rapidly changing since Russia and Iran withdrew military support from the Assad regime, which has reset the balance of power. Turkey, which has been a sometimes problematic U.S. ally, has been a conduit to HTS and is emerging as a power broker.
A high-risk mission like this is unusual for the typically risk averse Biden administration, which has exercised consistently restrained diplomacy. Blinken approved Carstens and Leaf’s trip and relevant congressional leaders were briefed on it days ago.
“I think it’s important to have direct communication, it’s important to speak as clearly as possible, to listen, to make sure that we understand as best we can where they’re going and where they want to go,” Blinken said Thursday.
At a news conference in Moscow Thursday, Russian President Vladimir Putin said he had not yet met with Assad, who fled to Russia when his regime fell earlier this month. Putin added that he would ask Assad about Austin Tice when they do meet.
Tice, a Marine Corps veteran, worked for multiple news organizations including CBS News.
CBS News
12/19: CBS Evening News – CBS News
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Delivering Tomorrow: talabat’s Evolution in the Middle East
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