Record-low mortgage rates aren’t jump-starting the U.S. housing market. 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. Since prices of homes are as low as mortgage rates are, short term losses are taken by numerous for the gains that come with a lower rate of interest. Most are trading up to better homes but end up with a lot more money in the end. Numerous feel completely comfortable spending money to refinance the mortgages they have.
Mortgage rates and also the housing market
With the U.S. housing market in the toilet, the Wall Street Journal reports that economists say trading up to new homes or refinancing existing ones can make good financial sense — even if it means giving up cash to get out of an underwater mortgage. Better homes are available to everyone who’s willing to make the sacrifice with their mortgage. Everybody can afford larger homes with all the mortgage rates so low.
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. However, the Los Angeles Times reports that record low mortgage rates are making cash-out refinancing pass and “cash-in” refinancing very popular. Considering there isn’t much you are able to rely on anymore when it comes to your investments, your home is probably the best way to go. 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.
Investing wisely
Most people are trying to pay back their mortgages as soon as possible. Totalmortgage.com looks at it as all the money saved is really money that is now earned and can be spent. When paying down a mortgage, the quicker it can be paid off, the more money could be put towards other investments. It will help quite a lot of people to invest in real estate this way. Many people just want to refinance in order for their loan to become a 15 or 20 year loan instead of a 30 year loan. This sets them up to conserve thousands of dollars over the life of their loans, and their monthly payments are lower than they were before.
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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