Interest rates are super low! So, what does that mean for you?

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Interest rates have hit 3.625% as of this morning. That is incredibly low since many in our industry had expected rates to jump up over 5% this year. However, today’s rate is the lowest since November 2016 and may even go a bit lower. So, why is this happening and what does it mean for you?

 A local mortgage banker, summarized it the best.

“Traditionally, when there is chaos in the markets, investors turn to bonds, this in turn drives interest rates down. Specifically, the recent escalation of the trade war with China has caused a sufficient amount of chaos in our markets.”

So, it’s this market chaos that has lead us to these lower than expected interest rates… What should you do about it? 

THINKING AOBUT BUYING A NEW HOME? Now is a really good time to buy. You’ve got much better buying power. Today, you can buy 15% more home than you could last year for the same monthly payment. For average home prices in Danville, that means you can afford about $200,000 more than you could last fall for the same monthly payment.

Rates should remain low for the time being. However, lenders and investors in mortgages backed by bonds may eventually adjust their products or investments due to potential losses in profitability. In a few years when rates are up again, your friends will envy your interest rate and you’ll be glad you did it.

THINKING AOBUT SELLING YOUR HOME? Where last year represented a peak in sales and price, this year looks to represent a plateau. Buyers may be hesitant for fear of a correction but it is looking like the correction will not cause a decline in price due to the strong economic conditions supporting this cycle – many cash buyers, solid underwriting and credit conditions. In other words, prices look to be leveling-off , interest rates are low and attractive to buyers. This coupled with lower than normal inventory in the Danville area, it’s a good time to sell!

THINKING AOBUT REFINANCING? Since the recent rate drop, many 30-year mortgage holders could likely refinance and save and either reduce payments or shorten the length of their loan. When refinancing, consider that you are reducing what you owe each month and if you continue to make your current payment or pay more than the minimum, you will pay off your loan sooner – in some cases much sooner.

Whether you are buying, selling or refinancing, remember to shop around for the best rate – mortgages involve more than the advertised rate you’ll find online including points, fees and term. If you need a referral, I would be glad to recommend several lenders we have used for years.