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In the midst of the coronavirus pandemic, the economy's instability is evident to all. As a result of this, real estate markets are also experiencing a significant shift.
How is the economy now?
As the impact of the coronavirus continues to rise, the economy is also not left out. Consumer confidence is deteriorating, trades are slowing, and the constant gains in economic growth are on the verge of evaporating. These effects, in return, affect how the mortgage rates are set.
How does coronavirus affect the mortgage rates?
The coronavirus has increased the possibility of the mortgage rates being cut down. This means that as the virus continues, the economic growth falls, and in return, the mortgage rates drop. The current mortgage rates are already low and will continue to be at historic low levels if the coronavirus pandemic persists.
Why it may be a great time for you to refinance or buy a home
As a response to the coronavirus pandemic, the Federal Reserve has actually slashed the interest rates. With the low rates, therefore, you stand a chance to enjoy vast benefits for refinancing or buying a home. Here are some of the top benefits:
1. Saves you money by reducing payments
A decreased monthly mortgage payment is something that, as a homeowner, you look into when refinancing your home. This means that the amount you pay every month is reduced by a certain percentage. You should, however, be careful to consider how long you will be in your home so that the monthly savings are higher than the refinancing or home buying closing costs.
2. Saves you money by paying off your mortgage quickly
In real life, your mortgage is not the only expense you cater for every month. The other expenditures such as school fees for your children that await you. When the rates are lower; therefore, you are able to pay the loan faster and then shift your focus to the other expenditures.
3. Helps build your equity faster
When the mortgage payment period has reduced, you stand a chance to build equity in your property faster. This shorter-term also saves you the interest payment money over time.
4. Get money out of your home
Once you have built property equity in your home, you are able to get cash out of your home to cater for other essential things. For instance, that money that could have been used for kitchen remodeling, bathroom renovation, and other connected issues would help to consolidate bills or pay down your high-interest credit cards. Therefore, if you have good credit, a low-interest rate gives you a chance to borrow against your home's value at a lower cost.
5. Makes your mortgage payments more predictable
Many homeowners go for short term and adjustable mortgage rates because they are not sure for how long they will live in that home. However, with low rates, you can be able to get a fixed-rate mortgage to buy or refinance your home. The fixed-rate mortgage is more predictable than the adjustable mortgage rates.
6. Helps you bid goodbye to mortgage insurance
When your home value increases and the balance you owe decreases, refinancing, lowers your mortgage insurance payments or completely eliminates them. For you to get to this level, however, you must have paid off like 80% of your home's value.
During these uncertain times that we are dealing with COVID-19, it's therefore, the right time for you to refinance your home or even buy a new one. If you are considering refinancing your home or getting a mortgage for a new home, feel free to contact First Savings local expert Loan Officers to discuss the options that you have and also get a chance to learn about today's current rates.
Please note, by refinancing your existing loan, your total finance charges may be higher over the life of the loan.