Low Housing Interest Rates And The Benefits for Buyers & Current Homeowners

With current housing interest rates hitting a historic, all-time low (thanks to COVID), that homeownership dream (or home reno dream) can finally become a reality. Single-family home sales increased by 2.94% in 2020, compared to 2019. 

Who knew that low housing interest rates would be one of the good things to come out of a global pandemic?

While the pandemic seems to bring only the negative along with it, it is creating a few positives along the way. 

If buying your dream home has never felt achievable, or you’ve felt like you’ll be stuck renting forever, now is the time to get into the perfect home.

So how exactly do these changes benefit home buyers and current mortgage holders? Larger Budgets For New Buyers.

With housing interest rates dropping, this means you have more buying power, and larger homes are becoming more affordable.

For example, let’s say you’ve found a house you love, but the price is $400,000. With past mortgage rates, that $400,000 home was way out of reach. However, with today’s rates, it might be right in your price range. Let us break it down further:

With the current mortgage rates, you could be paying over $500 per month LESS on that dream home mortgage. You would have the same down payment, same mortgage amount but significantly cheaper monthly payments.  

Your Principal Gets Paid Down Quicker

Like any loan with interest, it can be painful to see just how much of your money goes towards the interest and how little actually goes towards paying down the principal amount.

This is where low mortgage interest rates greatly benefit those buying a home and taking out a mortgage. 

Lower rates mean you are paying less interest each month. 

Less interest means more paid off on the principal amount, and with those higher principal payments, your mortgage is getting paid off quicker. 

Get Help During A Financial Crisis

The COVID-19 Pandemic has hit many people pretty hard financially. People are struggling to pay their debts, their regular bills and thousands have been completely put out of work. 

So how do these low rates help current homeowners?

It opens up an opportunity to refinance and get a more manageable payment right now. If you’re falling behind in payments, you’re not only getting behind, but you are damaging your credit.

When you refinance and take advantage of a new lower interest rate (with a new lower monthly mortgage payment), you can save your home, protect your credit and save your sanity.

These current housing interest rates are not just beneficial to people looking to buy; they are something current homeowners should be looking into. 

Be sure to get a hold of your current mortgage lender and see what options you have available.

Refinance Your Mortgage and Finally Do Those Renos

Let’s face it, home renovations are costly, even if you tackle most of them yourself. 

The average home renovation can cost $25,000 on the lower end and $76,000+ on the higher end. That bill can add up even more, depending on how much renovating you plan to do. 

But how exactly does a low-interest rate benefit anyone looking to do some major home renovations? Well, refinancing your primary mortgage means locking in a new, lower rate. 

New Mortgage, New Lower Rates

You can negotiate the terms of your mortgage and get a loan (just like you did getting the initial mortgage loan), but the difference is that you’ll get back any equity in your home. 

So now you are left with a lower rate and payment as well as a chunk of money you can put towards those home renovations you’ve been dreaming about. However, before you break your mortgage, you need to be aware of the penalties involved.

Ask About The Break Fee

The break fee for your mortgage can be equal to three months of interest for a variable mortgage or three months of interest + for a fixed-rate mortgage.

So before you jump into refinancing, make sure you talk to a professional.

While the housing interest rates provide many benefits with their historic low, it’s always crucial to seek the help of a mortgage specialist and realtor before making any huge decisions. 

You don’t want to leap into something you don’t fully understand and then get stuck in a bad situation.

Your realtor and your mortgage specialist will be able to look at your current position (whether you are looking to buy for the first time or looking to refinance or upgrade), and they will work with you to find the right solution. 

Ready To Take Advantage? 

If you’ve already talked to your mortgage specialist, you’re ready to take advantage of the housing interest rates and a first home or upgrade is in the books, then the next step is to call a local trusted realtor to begin the house-hunting process.

If you’re looking for a home in the Bonnyville or St. Paul area, our great team at CENTURY 21 Poirer is standing by and ready to help. With great safety procedures in place, we can make the home buying process smooth and enjoyable for you (even during a pandemic).

Contact us today to find the perfect home for you.