Just as the mortgage rates are at record lows right now doesn’t mean the U.S. housing market is getting any better. Since the real estate market is so slow, and mortgage rates have gone down significantly, many are more able to discover opportunities within the market. Having a lower interest rate will helps numerous be willing to take that step of losing some money to hopefully do better within the long run. Many are losing their homes, but coming out ahead with what they get instead. Others are learning that spending their own cash to refinance mortgages is one of the safest investments to make these days.
Mortgage rates at record lows with a poor housing market
Economists told the Wall Street Journal that right now, trading homes or refinancing your home is going to make a huge difference to your cash flow. Better homes are available to anybody who’s willing to make the sacrifice with their mortgage. Since with mortgage rates so low, monthly payments of larger homes are still manageable.
Cash-in refinancing versus cash-out refinancing
Typically, people refinance to “cash out” some of the equity they’ve built up in their homes over the years so they can use the cash. Oddly enough, more people have been interested in “cash-in” refinancing, as outlined by the Los Angeles Times. It makes sense that individuals would put more money into their home considering that’s one of probably the most stable investments now and days. In last year’s fourth quarter, a 3rd of all borrowers who refinanced mortgages lowered their principal balances by putting money into the deal rather than taking it out.
Invest in homes wisely
Some individuals are opting to pay down their mortgages early. Totalmortgage.com reports that interest saved is interest earned. Paying down a mortgage — even an underwater mortgage — early is basically equal to putting that money in something that yields an equivalent return to the borrower’s mortgage rate. Real estate investing like that is a breath of the outdoors these days. Many individuals just want to refinance in order for their loan to become a 15 or 20 year loan rather than a 30 year loan. Doing this, one can save thousands of dollars and will even have lower monthly payments a lot of the time.
Further reading
Wall Street Journal
online.wsj.com/article/SB10001424052748704421304575383490870014662.html?mod=WSJ_hpp_sections_personalfinance
Los Angeles Times
articles.latimes.com/2010/jul/11/business/la-fi-lew-20100711
Totalmortgage.com
totalmortgage.com/blog/mortgage-rates/low-mortgage-rates-afford-unique-housing-opportunities/5198
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