Low Interest Rates and How They Benefit Your Wallet
Low interest rates can be both a good and a bad thing. On the downside, low interest rates mean lower interest earned on savings accounts, certificates of deposit and savings bonds. While that sounds bad, there are far more benefits to your wallet when interest rates are low. Lower interest rates mean lower interest on credit cards, school loans, car payments, home equity loans, home refinancing and home mortgages.
For mortgages and related home loan services (refinancing and home equity loans), lower interest rates are generally beneficial for your wallet. While interest rates are not directly linked to the interest rate laid out by the Federal Reserve, they tend to follow where the federal interest rate leads. Mortgages are more closely linked to U.S. Treasury Note yields, which naturally rise and fall in line with the federal interest rate.
What does all of this mean for your wallet?
Our current interest rates are at or near historic lows. This means there is less interest on a home loan. This means you can buy more house for the same monthly payment or you can choose a home below your budget to keep housing costs down. Either way, you get more bang for your wallet’s buck while mortgage interest rates are low. If you are happy in your existing home and don’t plan to sell or buy, you can refinance to take advantage of the lower interest rates and lower your monthly payments while keeping the length of your loan close to the same. Lowering your monthly payments can help you pay off other bills, invest in improvements or upgrades within your home or just save you some extra money each month.
Whether you’re in the market to buy or looking to refinance, the time is now. Interest rates are at or near historic record lows but that could change in our somewhat unpredictable market so it’s important to buy while rates are low to get the most out of your investment in a home. Talk to your Century 21 Broadhurst agent today about getting pre-approved and on the hunt for your new home.