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Interest Rates – “Time to sharpen the pencil”

2020 has been an interesting year to say the least – between COVID and political unrest I think that most of us look forward to putting 2020 behind us; but, oddly enough, 2020 has been a record year in real estate. With rates as low as 2.25% for a a 30 year fixed mortgage, it is a good time for almost everyone who currently has a mortgage and those that are considering getting a mortgage to take a hard look at what can be done while this opportunity is present.

If you are a current mortgage holder it is important to check your current rates and see if you can improve on the rates you currently have. You may also be able to shorten your term and keep the same payment. Some banks such as Farm Credit will do a conversion on your loans for a small fee, therefore resetting your loans to the better rates – check with your banker on this. For others it might be a good time to refinance and wrap up a high interest commercial rate loan into a lower rate mortgage loan. This could also be the time to take cash out for that land investment you have always wanted. Now is the time to sharpen the pencil and make the most of your current investments to possibly put yourself in a more comfortable position or open up your buying power.

IF you are looking to purchase real estate while the rates are low, it can be a very overwhelming time for you. While locking into the right home at these rates is a dream come true and at these rates you have more buying power as you can afford more for your monthly payment, the low rates have created a very competitive market. There are areas and price points where it is very hard to obtain the winning bid on a property and in those areas we are seeing market values rise very quickly. Even in areas that are not used to seeing a demand for real estate, we are seeing a nice upswing in real estate transactions. With this market, it is really important for buyers to be pre-approved (understand their buying power), and work with a real estate agent / broker to guide them in negotiations.

Interest rates will not hold this low forever, so it is important to really evaluate whether now is a good time to make these rates work for you. Rates are predicted to rise after the election – who knows how soon or how much. You will find that predictions of how much rates will rise depends on who will win the election. While those predictions are not putting the rates at “all time highs”, it will change the buying power for some.

As disappointing as 2020 has been on some levels, the earth still spins and if you can pry your mind way from the bad, there are opportunities to be found. So work to make life good, take advantage of every chance you get, and for some it is time to take advantage of these rates.

 

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