Home Builders Offering Low, Low Rates

Predicting anything in today’s topsy-turvy markets is chancy at best, but if low mortgage rates can put some life back into the staggering real estate market, the stage may be set for a recovery. As the national average interest rate on a 30-year fixed-rate mortgage dipped to just below 5% recently, Toll Brothers, an award-winning home builder, is going one better. The company is offering select buyers a 3.99% interest rate with no points on 30-year loans up to $419,000. One catch: to qualify for the low-interest rate, you need a credit score of 720 or higher.

The Toll Brothers initiative is just one of several tactics that home builders are using to move inventory and get some black ink back on their ledgers. Lower prices are one approach; others include tropical vacations and free custom upgrades like gourmet kitchens. Some builders offer layaway plans so home buyers can save for the down payment on their house.

Other builders, such as Centex, are dipping their toes into the low-interest-rate waters, such as initial mortgage rates of about 3.5% for the first 2 years. Unlike adjustable-rate mortgages, which many economists see as the villain behind much of the nation’s real estate woes, this rate will lock in at 4.5% for the remainder of the loan term after the 2 years are up. To qualify for many such loans, you’ll need at least a 3.5% down payment, and your credit rating has to meet Federal Housing Administration standards.