Historically Low Rates Mean New Opportunity For Borrowers

HOMES-102614-2Michelle Luxton
Assistant Branch Sales Manager
NMLS 363495
Mann Mortgage, LLC

With new headlines every day focusing on Ebola, ISIS and other national and international concerns, it may have slipped past readers that mortgage interest rates have dropped recently to their lowest levels since early 2013. According to Freddie Mac, the national average for a 30-year loan declined to 3.92% this month, well below the average rate from January 2014 where is stood at 4.53%. Lower interest rates for mortgages present a lot of positives for our economy locally and nationally.

It not only helps people save money each month but also contributes to and stimulates the local economy by increasing the number of home sales and purchases. The number one way to capitalize on lower interest rates is to refinance your existing mortgage. Whether you have a conventional, FHA, VA or USDA loan, you can take advantage of the low rates to lower the amount you pay each month. Here are a couple of reasons why refinancing could be right for you:

One of the main advantages of refinancing regardless of equity is reducing monthly payments. Often, as people work through their careers and increase the amount of money they make, they are able to pay all their bills on time or open new forms of credit and thus increase their credit score. With an increased credit score comes the ability to secure loans at lower rates, and many people refinance for this reason. A lower interest rate can have a profound effect on monthly payments, potentially saving you thousands of dollars a year.

Second, many people refinance in order to obtain money for large purchases such as a car or to reduce credit card debt. The way they do this is by refinancing for the purpose of taking equity out of the home, commonly referred to as a cash-out refinance. A cash-out refinance allows a homeowner to take out a large sum of money at a very low fixed interest rate and use that money for any purpose of the borrower’s choosing. It is a great way to pay credit card debt, auto loans, school loans or other outstanding items.
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Another great way to take advantage of the low interest rates is to purchase a new home. The lower interest rates go, the greater your purchasing power becomes. For example, a buyer that is approved for a $300,000 loan at 5% is approved for a $337,000 loan at 4%. That is an increase of $37,000 in purchasing power created just by a lower interest rate and not by paying off debt or increasing income. Especially when purchasing in a high-priced market like Hawaii, any boost we can get to help us buy here is great to take advantage of.

No one can be quite sure how long these low rates will last. With market volatility, interest rates move daily and some predict the rates will soon return to their historic average of 6%. It is important to move quickly to take advantage of low rates before they are gone.

Refinancing or purchasing may not be right for everyone. At Mann Mortgage we continue to serve our community and clients with a wide range of mortgage products including all of the programs I mentioned earlier and more. We strive to provide outstanding customer service while protecting the best interests of our clients. If you have any questions about refinancing or would like a free consultation to see how much you can qualify for, please feel free to contact me. You can reach me at 808-228-8850 or email me at mluxton@mannhawaii.com

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