Just because the mortgage rates are at record lows right now doesn’t mean the U.S. housing market is getting any better. However, record-low mortgage rates and a real estate slump that is driving down home prices present unique opportunities, even for people whose mortgages are under water. Having a lower interest rate will helps many be willing to take that step of losing some money to hopefully do better in the long run. People are taking a loss on their current homes, trading up and coming out ahead. One of the best investments you can make right now would be to refinance your home, although you’d lose a bit of cash. Source for this article – Record-low mortgage rates create unique refinancing opportunities by Personal Money Store.
Mortgage rates at record lows with a poor housing market
You’ll end up with a lot more money if you listen to the economists within the Wall Street Journal who suggest trading up homes or refinancing your home you have now. Anyone who can sacrifice a little sweat and money can be able to get a home that is way better than the one they are used to. Everyone can afford larger homes with all of the mortgage rates so low.
The main difference between cash in and cash out
Typically, individuals 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 individuals 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 third of all borrowers who refinanced mortgages lowered their principal balances by putting money to the deal rather than taking it out.
Invest in real estate with your brains
Some individuals are opting to pay down their mortgages early. Totalmortgage.com reports that interest saved is interest earned. When paying down a mortgage, the quicker it can be paid off, the more money can be put towards other investments. It is nice to see individuals being willing to invest in real estate like that now. Other borrowers are taking advantage of record-low mortgage rates to refinance from 30-year fixed mortgages into shorter-term mortgages (15 or 20 year fixed). Doing this, one can save thousands of dollars and may also have lower monthly payments a lot of the time.
Additional 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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