Tag - interest rates

Dealing With Rising Interest Rates

Since the beginning of the year we have seen rates slightly increase, however rates are still low when compared to the rates before the pandemic.

I highly recommend acting sooner than later if you are wanting to make a change related to your mortgage.

My team is watching the market daily and listening to reports from experts, to help you navigate the market and find the opportune time to move forward with your refinance or purchase.

If you have any questions about the market, purchasing or refinancing feel free to give me a call. I am here and happy to help!

Low Mortgages Rates are Propelling Wave of Cash-Out Refinances

The continuation of favorably low interest rates has propelled a wave of cash-out refinances, the most we have seen since the financial crisis of 2008. Many think this is cause for concern, but its not; at least not yet. Given the rapid growth in the home process in the last year, the share of cash-out refinances isn't terribly high. There were more during earlier housing booms, including the housing crash 15 years ago. A cash-out refinance allows a borrower to swap their current loan for a new one with a higher balance. So, homeowners can pay off their old mortgage and still have cash left over. A recent report found that in 2020 the amount of equity tapped into through cash-out refinances increased by 42%. These days, it appears that most borrowers are using the funds to pay down other debt and to update their homes. Home improvement spending sky-rocketed during the pandemic. Homeowners are sitting on a lot of home equity right now and what a lot of people are doing is taking this money, getting a cash-out refinance, and using the cash to make renovations to their home. Many projects from adding a screened-in porch, updating a bathroom, creating a home gym or adding an official home office all add to overall value of a home. These are smart moves to make as the improvements are actually going to help their home sell for a significantly higher amount of money in a few years. It's important to do home improvements that are low cost but add the biggest value to your home. Interested in looking into the amount of equity you could tap into? Reach out about a cash-out refinance. Whether you are looking to pay off some debt or complete a home remodel, we can help guide you ever step of the way. Call today! 801.206.4343

*Source: Kiplinger Letter: Vol.98, No.10**


Now is the Time to Buy

The housing market will remain hot this year as favorable interest rates and sky-high demand continue to drive the market forward. Although we are seeing a small rise in rates they are still near all-time lows. The main worry for today’s market is the low inventory of houses on the market. Sure, you can sell your home no problem, but what are you going to move into? Supply is extremely tight and inventory levels are dramatically below anything we have seen in the past. New construction is not keeping up with demand, and the pandemic shutdowns took a huge chunk out of builders’ production, as they were not able to put anything on the market for six months. However, thanks to low interest rates, they were selling more than they ever sold before. The market was already struggling with inventory but due to this decrease in builders’ supply inventory got even tighter. Plus let’s not forget, with low inventory comes higher home prices since more buyers are competing for the same homes which drives up a seller’s price. A recent report showed home prices grew by about 10% in 2020 and show no signs of letting up in 2021. We won’t begin to see price decrease unless there is an is an excess inventory. The good news for the housing market is we are definitely not over built. Builders are more in demand than ever and are working quickly to build new inventory for the market. As new inventory comes onto the market and more people decide to sell their homes, buyers looking to buy this spring could be entering into the market at an amazing time. Fitting perfectly into a sweet spot where there is more inventory and fewer buyers, since a handful of buyers will be bowing out to wait to for the market to slow down. But the thing with real estate is you don’t want to wait. You could be missing out on major appreciation gain. Currently high demand and tight supply are pointing towards 6% appreciation for homes in 2021. For instance, if you buy a home for $600,000 with 10% or $60,000 down, a 6% appreciation on that home equals a 60% return on that down payment investment. You can’t expect an appreciation gain like that if you try to wait for the market to slow down. If you're shopping for a home, with rates near historic lows and home prices appreciating nationwide, there is an amazing opportunity to build wealth for your family through real estate. Contact me today and let’s discuss your situation.

Effects of the New Stimulus Package

Home loan interest rates have been moving higher recently, but they're still at very attractive levels that are close to those historic lows we saw throughout 2020. However, with President Biden’s administration recently passed another stimulus plan in an effort to continue to revive our battered economy many are worried about the effect it will have on the housing market. The massive new stimulus plan is causing fears of inflationary pressure – and remember inflation is the arch enemy of interest rates. Initially what the money from stimulus does is create economic activity and some inflation, but after the effect of that wears off, debt takes over and you have to make the payments on that debt. Which leaves less money to generate economic activity and slows the growth. Think of it like a family that just went to into debt to purchase a new car. The initial purchase creates economic activity, as the manufacture, seller, and dealership all make a little money from the transaction. This economic activity generates some inflation pressure, but it wears off and what remains for many years is the monthly payment on that debt which acts to slow the growth. This is exactly what is expect to happen with the governments issuing stimulus money. With the stimulus plan going into effect, we believe interest rates will continue to bump a bit higher at the beginning of the spring market. As people continue to gather more and return to work it will alleviate inflation pressure and we will start to see rates relax more later in the year. If you have been considering a home purchase you have two options, choose from the rate today or the rate in the future. I highly recommend getting locked into a lower rate now while you have the opportunity to. Plus, if you buy into a rate that you don’t love we can always refinance your loan in the future. Let’s get your loan moving before rates move higher! Contact me today to see how you can benefit before things change.

The Cost of Waiting

Interest rates have been at historically low levels this year due to the COVID19 pandemic. Many people have taken advantage of these great rates by purchasing a bigger or more expensive home with the same or more affordable payment. And even more people have taken advantage by refinancing their loan into a great low rate. However, even with rates at extremely low levels there are still many people wondering if it's a good idea to wait and see if rates get better before purchasing a home or refinancing. One thing that is not often considered when it comes to playing the waiting game with interest rates is the amount of money you could be saving while you wait for interest rates to lower.  Even if rates do improve in the future, the money that could be saved during the waiting period may be significant. A few hundred dollars saved per month could add up to potentially thousands before a lower rate opportunity arises. The forecasted appreciation is 2.0% in just the next  months. This means a home worth $350,000 today would be worth $7,000 more in 6 months. If you are playing the waiting game you are missing out on the potential appreciation and ammonization of your home. It could take many, many years to recoup the money you have lost. While it is true that we don’t know if rates are going to go lower, we do know that they will eventually go higher. Why risk the chance of missing out on a great low rate and savings each month?  It could take a long time for the savings of a lower rate in the future to make up for all the money that was lost by waiting for interest rates to lower again.  And remember, there's no guarantee that rates will go lower. Besides should rates drop significantly, we can always refinance you in the future. It's important to weigh the individual options for your situation and I'm here to help you do that. If you have any questions on a home purchase or refinance give me a call, 801.206.4343. I would love to answer any questions you have and discuss the best option for your specific situation.