How About a 1% Mortgage Rate?

Posted on August 3rd, 2020
How About a 1% Mortgage Rate?

Well, maybe not exactly 1%, but in the 1% range? More specifically, starting with the number “1,” which on its own sounds too good to be true.

It’s now a reality thanks to, you guessed it, United Wholesale Mortgage, who again is bringing some of the lowest rates in the industry via their aggressive Conquest loan program.

In case you’re not familiar, UWM works exclusively with independent mortgage brokers, meaning you can’t call the (wholesale) lender up directly to get a mortgage rate quote.

Instead, you’ll need to find a mortgage broker that is approved and working with UWM, who can shop your loan with UWM among other partners.

If all works out, and you’re into the idea of a 15-year fixed mortgage as opposed to a 30-year fixed, a mortgage rate that starts with the number one might be in the cards.

Get a 15-Year Fixed Mortgage Rate Below 2%

  • UWM’s Conquest program now offers low rates on 15-year fixed mortgages
  • Interest rates starting as low as 1.875% for well-qualified borrowers
  • Those with high-rate 30-year fixed mortgages may not see a big payment difference when refinancing
  • Possible to save hundreds of thousands via lower interest expense

In order to qualify for a sub-2% mortgage rate, you’ll need to go with a 15-year fixed mortgage, which is inherently more expensive due to its shorter loan term.

However, that shorter term also means you’ll pay a lot less interest and own your home a whole lot faster.

And assuming you qualify for UWM’s Conquest program and manage to get a rate of 1.875%, the difference in payment may be negligible if moving from a high-rate 30-year product.

Let’s look at an example to illustrate. Say you took out a 30-year fixed at 4.875% two years with a loan amount of $300,000. Yes, rates were that high just two years ago!

Your current monthly mortgage payment would be $1,587.62. After two years, you’d have whittled that balance down to roughly $291,000.

If you were to refinance your mortgage into a 15-year fixed priced at 1.875%, your new monthly mortgage payment would be $1,855.91.

Yes, $268 more per month, but you’d be free and clear in 15 years, as opposed to 28.

More importantly, you’d pay about $200,000 less in total interest. Yes, $200,000.

If you kept the old mortgage, you’d pay $272,000 in total interest over 30 years, assuming you held it to maturity.

If we factor in the interest on the first two years on the old mortgage and 15 years on the new 1.875% 15-year fixed, it’s roughly $72,000 in interest total.

Does a 15-Year Fixed Mortgage Make Sense Today?

Now a 15-year fixed isn’t for everyone, especially those who can barely afford a 30-year fixed, or have a better use for their money.

There’s also a decent argument these days that your money could be better served elsewhere, with mortgage rates so cheap at the moment.

Don't let today's rates get away.

If you can borrow at around 2.5% to 3% on a 30-year fixed, there’s a good chance you can beat that rate of return in many other places.

However, if you’re risk-averse and totally dislike debt, which seems to be a lot of folks out there, this strategy could be pretty darn effective.

For the record, UWM also offers 30-year fixed mortgage rates as low as 2.5% via their Conquest conventional loan program.

Similar rules apply – most importantly, you must not have refinanced via UWM in the past 18 months to qualify for these low rates.

And it only works on home purchase loans and rate and term refinances (no cash out permitted).

Additionally, it has to be a primary residence or second home. In other words, only vanilla loans are eligible.

As I said when they released their 30-year program, it’s another sign (of confidence) that mortgage rates are likely going to move lower in the near-future.

In other words, we might see a 15-year fixed priced close to 1.5% at some point soon if this trend continues.

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