What Should You Do When Mortgage Rates Are Low?

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Every news outlet has remarked on the mortgage rates of 2020 hitting record lows multiple times, which has resulted in an interesting situation for real estate during a global pandemic. People are thinking more about where they spend time with their families and friends. Many are moving out of the tight-quarters of the cities and out into the suburbs with more greenspace and more square footage for families to spread out, where kids and parents can make a better attempt at working and going to school remotely under the same roof. While across the nation we’re seeing signs of a seller’s market with low housing inventory, high prices and rapid purchases, the mortgage rates being so low still make this a good time to buy when you find the right property for your budget. However, the state of current mortgage rates does make this an excellent time to refinance if that’s something you’re considering. However, experts predict that mortgage rates will begin increasing again in 2021, so if you haven’t purchased in 2020, you’ll want to keep a close eye on potential mortgage rate increases as you prepare to either finance or refinance your home.

What About Refinancing?

If you own a home currently and you’ve been considering whether or not to renovate, you might be simultaneously asking yourself if it’s a good time to refinance. You can refinance your mortgage and free up that cash to make improvements to your home. When you refinance, the liquidity you get stems from either having a lower monthly mortgage payment, or you might do a cash-out refinance and borrow against your equity.  When you refinance the primary benefit is the fact that you can get a lower mortgage rate so you’re saving on the overall cost of your loan and potentially paying less each month.  It is a good time to refinance and potentially cash-out as well. If you refinance, ensure that you have good credit so that you really can secure a lower rate and make sure you account for the fees you’ll have to pay. There are situations where the rate may be low, but the fees might be high.  If you are going to refinance, even with low rates, you should still shop around and compare what’s out there.  Regardless of why you’re refinancing or the specifics of how you’re doing it, always do the math and ensure the costs don’t outweigh the benefits. 

What About a Home Equity Line of Credit (HELOC)?

Another way you could take advantage of low rates and make some repairs or renovations to your home is by getting a HELOC. If you plan to move within five years or you already have a low mortgage rate, a HELOC may be better than refinancing. On the other hand, if you plan to stay in your home for more than five years and you can get a lower rate, refinancing may be better.  There’s no one right answer for everyone right now as far as taking advantage of low interest rates. If you’re in a position of being torn between a refinance to renovate or buying a new home, factor in all the anticipated costs and possible pros and cons. These include everything from how much profit you could make selling your current home, to whether or not you would end up with a better deal if you refinanced after including all fees.  To find a top real estate agent in your area to partner with you on the buying or selling of your home, contact EffectiveAgents.com today. Photo credit: dieny-portinanni-nDQKJ3-0DV8-unsplash

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