Low interest rates mean huge savings for home buyers! When I bought my first property the interest rate on a the traditional 30 year fixed rate mortgage were in the high 5% area. As I write this post the very same mortgage is being offered in the low to mid 3% area. That’s a considerable amount of savings if you’re looking at a borrowing hundreds of thousands of dollars. That’s pretty plain to see, but let’s dive into the opportunities low interest rates present.
A low interest rates means that your monthly housing costs are less than would be with a higher interest rate. The very same purchase price comes at less cost. A borrower can save hundreds of dollars a month. That’s money in a buyer’s pocket.
Low interest rates mean that you can borrow more money. We purchase a home based on monthly payment. The same payment with a lower interest rate means you’re borrowing more money. This means more house for your money. It could mean buying a bigger, nicer home, in a better area.
Low interest rates mean that you can afford a shorter term. A borrower doesn’t have to get a 30 year fixed rate mortgage. Most lenders offer a 20 year, 15 year, and 10 year mortgage. Switching to a mortgage with a shorter term always comes with a higher payment. However, with a lower interest rate, that monthly mortgage payment amount goes down. Imagine shaving years off of your mortgage. Instead of having your home paid off in 30 years you can have it paid off in 20, 15, or 10. That creates a huge opportunity in the future. Imagine an existence with no mortgage payment.
Low interest rates mean that you can keep your payment the same and shave time off your mortgage term. If you get a mortgage in the low 3% arena, but make the payment as if you had a mortgage in the low 4% area you’re shaving years off your term.
At the end of the day low interest rates are a beautiful thing for home buyers. They present true savings for those in the market to buy a home. As always, reach out to me for a referral to a great lender.