What are the effects of low interest rates for homeowners?

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effects of low interest rates

In the last 10 years, we've all heard about historically low mortgage rates. But what does that really mean to homeowners? What are the effects of low interest rates?

In this video,  I share some of my thoughts on the effects of low interest rates and why you should take advantage of them. 

Way back when, in the year 2000, yours truly was approved for a Fannie Mae mortgage loan at 7% interest rate. 

I actually had no idea what that meant, but I definitely knew that that was REALLY GOOD. Today, we laugh in the face of 7%! 

Interest rates have been on a downward trend since then, they got as low as 3.31% in 2012 According to this chart by Value Penguin

See the full article here: https://www.valuepenguin.com/mortgages/historical-mortgage-rates

But here we are in 2020. And yet again, RATES ARE HISTORICALLY LOW.

After a little realtor research, I found rates as low as 3% in the Des Moines area today. Wow! 

So what does this mean to you? 

If you're a homeowner, you might consider refinancing. It usually costs a couple thousand dollars to refinance. So you'll want to talk to your lender to make sure that the savings makes sense for you over the long run. 

But, you might want to consider the PERFECT STORM.

Today, it's entirely possible that you could get a record high sales price for the home you currently own. Combined with historically low rates and you could REALLY maximize your buying power

The low interest rates give you the opportunity to buy more house than you could afford at a higher rate.

Each percent of an interest rate is roughly 10% of buying power. On a $300,000 house, that's maybe a swing of $30,000 give or take. 

So today's $300,000 house at historically low interest rates would cost you the same as or maybe even less than a house 1% higher for $270,000. 

For example: 

$300,000

@ 3%

__________

monthly payment of

$1,265 

(principal + interest only)

$270,000

@ 4%

__________

monthly payment of

$1,432

(principal + interest only)


If you buy while rates are low, you get a lot more house for your money

When you sell high and you buy with a low rate, that's the perfect storm. What a great combination of market conditions to help you really maximize your buying power!

If you're looking for other ways to save money while you're buying a house, or you want to use free money to buy a house, download our guide to finding the FREE MONEY in the Greater Des Moines area. We also include a lot of ways to SAVE money. 

Just tell us where to send it: 

If you're not sure what the right choice is for you - should you refinance? Or should you sell at a high price and buy with a low interest rate? - then you should talk to your real estate team. 

You have a trusted real estate agent and a lender. And between the two of them, they should be able to give you all the information that you need to make the best decision for you. 

If that trusted real estate agent is us - you can always schedule a call with me or someone on my team and we can talk through your situation. https://mywrighthouse.com/schedule-a-call/

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