Record-low interest rates have combined with a record-high housing demand to create a seller’s market that many have only envisioned. States that have a higher cost of living are seeing higher savings, but homeowners across the nation can benefit from this financial boon.
Record Low Rates
Freddie Mac’s record low of 2.72 percent for a 30-year fixed mortgage has caused a record volume of high-quality mortgage refinances. Those who took advantage of record-low rates saved an average of more than 300 dollars each month.
November’s drop in mortgage rates set a record for the 13th time in 2020. Homeowners who hadn’t previously taken advantage of the drop in interest rates may be able to save even more on their monthly mortgage since rates are continuing to drop. Almost 5 million borrowers could save more than 400 dollars monthly, and almost 3 million could save more than 500 dollars monthly.
Experts are optimistic about the trend continuing for the foreseeable future and recommend that those who have higher-interest mortgages consider their refinance options. Although refinancing requires a considerable amount of paperwork, the rewards of lower interest and paying off the mortgage balance sooner can outweigh the inconvenience of the paperwork that’s required for a straight refinance.
Those interested in a cash-out refinance can benefit as well due to the record-high demand for housing, which has occurred due to the pandemic. According to Standard & Poor’s Case Shiller National Home Price Index, housing prices had grown 7 percent according to their annual adjustment in September. Even though homeowners need to retain a minimum of 20 percent equity in their homes, they can still benefit from near record-high equity levels.
Location, Location, Location
By state, California has the most homeowners who could benefit from refinancing, followed by Florida, Texas, and New York. By city, homeowners in metropolitan New York City have the highest potential for savings, followed by Los Angeles, Chicago, and Washington, D.C.
Those who aren’t currently homeowners but would like to take advantage of the record-low rates may be able to do so even if they lack copious amounts of cash. Crowd-funding is a popular method for investing in commercial buildings. Many companies offer investments for potential landlords. REITs, or real estate investment trusts, provide an excellent entry strategy into commercial and residential real estate markets. No matter your choice, this is an ideal time to take advantage of the current low-interest rates for real estate.