How You Can Take Advantage of Lower Interest Rates
Recent economic news has sent interest rates plummeting. This is great news for those looking to purchase a home. Here is how you can use this to your advantage.
Steps to Lower Mortgage Interest Rates
Take a Fixed Rate Mortgage
Fixed rate mortgages are usually higher than variable rate mortgages. Many prospective homeowners will take a variable mortgage just to be able to get in the door to home buying. However, when interest rates are low, you can lock in a lower rate and use it as an opportunity to get some predictability at a lower rate. You do not have to take the chance that interest rates would rise and you would when you take out a variable mortgage. Most people would prefer a fixed rate mortgage and you can move directly to this when rates are lower.
Refinance Your Mortgage
When interest rates go down, you can lock in a new interest rate. The best loan officer Las Vegas has to offer can help you find an advantageous rate that can save you money on your future mortgage payments. In most cases, being able to save one percent on your interest rate would be enough to make refinancing worth it. Just make sure that you find a lender who does not require high fees for refinancing in order to take full advantage of the lower interest rates. In other words, you must always weigh the potential savings for a loan against the origination fees.
Prepay Less of Your Mortgage
Usually, prepaying your mortgage is a great idea because, by getting ahead of your payment, you reduce the term of your mortgage. When rates go lower, it is better to not prepay your mortgage and invest the money. This will give you a higher rate of return than you would get if you prepaid your mortgage. All else being equal, when you get a payment or two ahead on your mortgage, you end up saving on interest rates. (Read more on using a government insured loan for your home.)