With today’s currently low interest rates offering many benefits to borrowers, now is a great time to buy a home. Whether you’re in the market for a residential property or an investment property, low interest rates are a huge motivating factor to get out and start looking. Here are four reasons why you should buy now while interest rates are low.
1. Lower Monthly Payments
Lower interest rates translate to lower monthly payments on your loan. If you’re serious about buying, you should go to a bank or lending institution and get pre-approved for a mortgage. Shop around and get pre-approved at multiple different financial institutions to find the best interest rate and overall deal. A fraction of a percent difference could add up to thousands of dollars saved over the life of your loan.
2. Greater Purchasing Power
You should always begin your home search with a budget, identifying how much of a monthly payment you can comfortably afford. Once you have that number in mind, you might find that at the currently low interest rates you can borrow more money while keeping the same target monthly payment, increasing your purchasing power and enabling you to buy a higher priced property.
3. Build Equity Faster
With lower monthly payments you may have extra cash on hand to pay off the principal on your loan faster, in turn, building equity more quickly. Many lenders allow you to make extra payments on your loan in addition to your scheduled monthly payment. Making one extra payment a year could cut off years on your loan and save you thousands of dollars in interest payments as your loan matures.
4. Return on Investment
On an investment property the return on investment will be greater because your monthly costs will be less, resulting in a higher net profit. Whether the property is a rental or you’re planning to resell it, the carrying costs per month are more manageable, therefore you’ll recoup your initial investment faster when you collect rent or sell.
—by Jacqueline Kuron