How Does This Affect Homebuyers?
First of all, the interest rate is somewhat mitigating the fact that we are currently in a sellers’ market. Low inventory and high demand means house prices are up. However, the lower interest rate affects the monthly payments, and may allow you to afford a lower Indiana mortgage loan.
Be aware that fixed-rate mortgages tend to have a slightly higher rate, and adjustable rate ones may change dramatically if interest rates do happen to go up significantly as the economy moves to full recovery. However, this is still a great opportunity to lock in a low interest rate, at least for a while.
It might mean that now is a good time to buy even if the market is favoring sellers. If you are selling an existing home, then it’s the perfect time to move. But if you have always wanted to buy a home, now is a great time to talk to First Option Mortgage about what kind of deal you can get.
How Does This Affect Refinancing?
It’s more clear cut if you are looking to refinance to get lower rates, or even to get cash for an extension or emergency. This really is a good time to refinance. The general rule of thumb is that the best time to refinance your Indiana home is when the rates you are paying are one percent or more higher than the rate you can get. However, you should start looking at half a percent. This is much more likely to be true than normal.
However, you should also consider things like why you are refinancing (a definite no-brainer if you have enough equity to get rid of mortgage insurance payments) and what your credit score is. You should also check property values in your neighborhood. Increasing value may mean that you no longer have the desired 20% equity and it would be better to wait.
Mortgage rates being low means you can get a better deal on a mortgage or refinance, but you should still check all of the other factors, such as your credit score, debt-to-income ratio and equity. That said, now is a good time to look into buying or refinancing, to take advantage of historically low rates that are likely to increase by 2023.
Give us a call and we’ll gladly walk you through the process of either a home mortgage or refinancing regardless of where the market or rates are at.