Three Ways to Take Advantage of Low Mortgage Rates

Can you believe mortgage rates have fallen even lower? If you can qualify, now is the best time to buy a home with the average 30-year fixed rate mortgage rates staying steady around 4.3 percent. That’s the lowest they have been since the 1950s. Rates for a 15-year fixed rate mortgage are a half percentage point lower at 3.8 percent. If you can get your hands on one of these percentage rates, here are three ways you can benefit.

Pay Off Your Mortgage Sooner
If you have a 30-year mortgage, one of the ways you can benefit from the new low mortgage rates is by refinancing your home and switching to a 15-year mortgage. About 25 percent of new mortgage borrowers are choosing the 15-year mortgage for obvious reasons – they get a lower interest rate and they save a fortune by paying off their home in half the time. If you qualify for the low rates, you can do this, too. Even if you can’t afford the slightly higher payment that a 15-year mortgage would give you, consider refinancing to a 30-year mortgage at the lower interest rate. And when you have extra money in a given month, apply that toward your mortgage payment and you could pay off your home several months or even years earlier than expected.

Increase Your Cash Flow
If you choose a 30-year fixed rate mortgage either as a new mortgage or as a refinance, you can put more money back in your pocket at the end of each month. Of course, putting extra money toward your mortgage payments can help you pay off your mortgage earlier, but if you are trying to build an emergency fund or save up for a big purchase, those lower payments that you can get with a 30-year instead of a 15-year mortgage will help you have extra cash left over for other purposes. You will be paying more in the long run by the time you pay off your mortgage, but sometimes the financial need is immediate and it’s worth it to take a few extra years to have a paid off house.

Get a Second Home
Are you retiring soon and you want to have a home on the beach or in the woods for your retirement? Or do you just want to have a vacation home to go to each year in your favorite area of the country? Either way, you might be able to afford a second mortgage payment with the current rates as low as they are. Even if you want to rent the second home out until you get ready to retire, the mortgage rates are still very low. It’s a win-win situation all the way around!

You may never get another shot at mortgage rates this low. In fact, many analysts are predicting the rates to start climbing back up slowly in the near future. Make sure you get in while you still can!