If you don't already own a home, then it means this will probably be the best home-buying opportunity of your life. Not only have home prices been reduced by 50% (more or less) in the past few years, but the financing rates are lower than anything your parents or grandparents ever witnessed.
Consider this example. A $200,000 home loan may carry a rate today of 4.375% on a 30 year fixed (4.488% APR). A principal & interest payment in this example is $998.57 per month. This same loan with a 7% rate (an fairly average historical rate) carries a monthly payment of $1330.60. That is a 33% increase in payment when the rate is 2.625% higher.
If you or someone you know is in a position to purchase their first home, please call me.
Now, for those of you that already own a home, the obvious way to take advantage of low rates is to refinance. There are three basic strategies to refinancing.
- Lower the monthly payment & improve cash flow.
- Reduce the term on the loan (e.g. 15 year loan)
- Take cash out to pay off other debt or make a large purchase
I like to work with my clients to come up with the best strategy that fits their needs. Sometimes their best strategy is to not refinance, and I will often tell clients that. Please contact me to discuss your opportunities.