Are Low Mortgage Interest Rates a Good Thing or a Bad Thing?
Buying a home can be very intimidating. Not only are you under endless pressure to pick the right home, but you also need to navigate all of the legal and financial problems that arise throughout the home buying process. While there are too many of these to write about in just one post, we did want to take a minute and address something that is a pretty popular topic of conversation right now: mortgage rates. Mortgages are a very scary thought to most people, and they really don’t need to be! Mortgages are a great thing that help you to buy the house of your dreams. You just need to make sure that you know what you’re signing up for when you agree to the loan.
As a result of so many factors – Covid-19, economic frictions, etc. – different kinds of rates and prices have fluctuated all over the place. While this is not great for your wallet when it comes to certain things whose prices have inflated heavily, like gas and groceries, it can really help you when you try to buy a house…or at least it can help you with the mortgage part of it.
The Big M: Mortgage
I could write an entirely different post about mortgages and everything you need to know about them, but the truth of it is that a mortgage is probably the largest financial commitment you will ever have. After all, more often than not you’re signing up to pay thousands of dollars per month for the next couple of decades! It’s really important that you do as much planning and budgeting as possible before taking out a mortgage and talking to a financial professional is usually a very good idea to make sure that you are not signing up for anything that you can’t handle.
In this post, I will focus on the big question above and break down why exactly that answer is true. Hopefully by the end of this post, you’ll have a better idea of whether or not low mortgage rates are a good thing or a bad thing!
First, What is Interest?
If you have any credit cards or pay attention to your bank statement, you probably know what interest is. Interest is basically the fee that you pay or are paid for keeping your money somewhere or when promising to pay for something later. Your bank pays you interest for keeping your money in an account there, while you pay your credit card company interest for letting you buy something that you don’t immediately need to pay for. Simple, right? Interest is what the question in the title of this post is talking about when it talks about mortgage rates. Depending on what other banks are doing, your bank will offer to lend you the money to buy your home in return for monthly payments back to them plus a large wad of interest added on.
Looking at it that way, having low mortgage interest rates is a good thing…are there really is no other way to look at it when talking about personal finance! Low rates mean that you pay less for the exact same house, even when it is sold at the exact same price! If you want to buy a house for $200,000 and the bank offers you a mortgage at 3% interest, you will be paying the bank an extra $6,000 on top of the payments for the house, while if the bank offers you a mortgage at 2% interest, you’ll only be paying $4,000 in addition to the price of the house. Those savings can really add up, especially if your house costs a lot more than $200,000.
The interest rate isn’t the only thing that affects your mortgage rate. While banks look at a lot of personal factors, like your credit score, to help determine your rate, one of the biggest gears in the mortgage machine is the amount of time you will need to pay the loan off. Therefore, if you can promise to pay your mortgage off in 15 years instead of in 30 years, they will give you a better rate. This can also save you thousands of dollars!
Look for Low Mortgage Rates
So essentially, to sum all of this up, low mortgage rates are a great thing if you’re a home buyer. There really are no if’s, and’s, or but’s involved. If you have been thinking of buying a home, you should really consider taking advantage of the low interest rates that are on offer today! Rates have been trending downwards for a long while, but you never know when that trend will reverse itself. If you are not sure about buying a house, though, don’t rush into it just for low mortgage rates. Again, taking out a mortgage is the biggest financial commitment you will make in your life, and you don’t want to do it just because of some interest rates. However, if you are in the market to buy a house, there have been very few better times than now!
If you visit Myrtle Beach or any other place in South Carolina and fall in love, reach out to us for help. We at The Boyd Team are always here to help you figure out whether Myrtle Beach is your next home or not, and we are committed to helping you find the right property for your needs and dreams. Any question that you have about moving to the area and finding your dream home by the beach is our pleasure to answer. Feel free to send us an email at eddie@boydteam.com or text or call us at (843) 222-8566, and we will get back to you as soon as we can. Being true natives of the Grand Strand and Horry County and with over 25 years of experience in the local real estate market, whether buying or selling, we can help you make your dreams a reality.
No One Knows The Grand Strand Better! Trust, Knowledge, Experience, Professionalism, You Can Count On!
Written by Greg
