What is a good interest rate?

Question

So, I was rather excited when my bank came back after my family and I had put in our mortgage pre-approval forms and they gave us a 30-year fixed-rate mortgage for 5.0%.

I asked around with the people I loved and they told me their interest rates. My mother and sister both had in the 6% range and my father was at 4.75%.

Then came my mother-in-law. She and her husband got a 4.25% rate and told us we were stupid for taking anything over 4.5. 

I thought 5% was awesome. Am I actually right?

Anonymous · Accepted Answer

5% is an AWESOME rate. Your mother in law is nuts, she may have a 15 year note that was obtained a few years ago. If she received a 4.25% rate recently on a 30 year loan then she likely paid a boat load of points to get that rate. 

Thirty Year Fixed Rates are at HISTORIC lows, and 5.00% is a great rate!

Chris · Answer

Your mother in law might not know what she's talking about. A 5.0% rate is fantastic, and based on historic fluctuations, is incredibly low. Right now most commercial mortgages are going for between 6.5 - 8%, to give you some idea. 

I would guess that less than 10% of fixed-rate mortgages in America are below 5.5%, and most are above 6%. It is possible that your MIL has an adjustable rate mortgage, which would explain why it is lower -- she'll see the difference when the balloon payment comes, if so. 

Definitely move forward with a 5% rate. It is possible that rates will continue to drop in the next few weeks, but it's not always wise to rate watch, because we don't know what is going to happen.

Anonymous · Answer

I just bought a house , closed on the 1st of Nov and we locked our rate at 5.90 which is a pretty darn good rate. So, 5.0% is a great rate and I would die to have that rate! $4.25 was a dream rate that happened in about 2002 or 2003, rates may come down that low again but it probaly isn't even worth refiing for you cause the fees would cost you 3,000 to 5,000 dollars. So I would be happy. good luck

ucftrev · Answer

you are right. the rate is based on your credit...they may have had longer credit records than you, so they could qualify for better rates. 5% is great!

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What is a good interest rate?

4 Answers