The latest on mortgage rates is that a 30-year fixed averaged 4.27% this past week. At this rate, it might mean that it’s a good time to get a mortgage loan. After all, even if you do not qualify for the best rate — that 4.27% — you are still likely to qualify for something that is reasonably attractive.
Buy a Home
If you are in the market for a new home, it might be worth it to consider buying now — unless, of course, you think that mortgage rates are likely to drop even more. When you buy a home at a lower interest rate, you will pay a lower amount each month, as well as save money over the life of the mortgage. With fixed rates so low, you can take advantage of the fact that later, when interest rates rise again, you will have a low, low rate.
Some people, who have been considering second homes, or buying investment properties, might find that now is a good time to go for it. While you don’t generally get the same interest rate you would for a residential home, you can still get good rates right now.
The main issue, though, is getting approved. Credit is still tight, and unless you have good credit, and can show that you have adequate income to go with your good credit, it is difficult to get loan approval for any sort of real estate loan.
Even if you aren’t planning on buying real estate, you can take advantage of the low mortgage loan rates. If you have been holding out, it might be a good time to refinance your home. With mortgage rates so low, you could save thousands over the life of your mortgage by refinancing.
Before you refinance, though, it is important to consider your situation. The difference in interest rate needs to be big enough to make up for all of the fees you will likely have to pay at closing. The good news is that many financial institutions are offering special deals with no closing costs. You should also ensure that you will be in your home long enough to make it worth it. If you have the money, it might be worth it to consider a cash-in refinance, which can help you reduce the principle further, saving you even more.
Home Equity Loans
Now might also be a good time to get a home equity loan or a home equity line of credit. While you wouldn’t necessarily want to use a home equity loan or HELOC to fund a vacation, it might not hurt to use one to fund home improvements. If you have been thinking of making home improvements, including some that could result in a green tax credit, you could save. Note, though, that many loans based on your home equity have variable rates, so you could end up seeing your rates rise later.
Finally, before you make a decision on any type of home mortgage loan, it’s a good idea to consider the possibility of a 15-year mortgage. The fixed rate for a 15-year mortgage loan is below 4% right now, and if you have the ability to make a higher payment, getting a shorter term on your mortgage could save you big — plus help you be completely debt free much sooner.
Miranda is freelance journalist. She specializes in topics related to money, especially personal finance, small business, and investing. You can read more of my writing at Planting Money Seeds.