We all hear the talk. It’s impossible to miss. It might only be a snippet of conversation between some financial analyst and an economist discussing strategies employed by the feds to help boost the economy. But we hear an awful lot about interest rates. What do low interest rates really mean for home buyers and sellers? Let’s take a look.

Now. I’m not going to take you through all of the pieces of the financial puzzle that actually affect mortgage rates. Let’s keep it simple by saying that both banks and the federal government have an interest in how many people are purchasing a home. The bottom line is that in the beginning of 2020, we have seen record lows for interest rates on home mortgages. Yes. Coronavirus has had a negative impact on the economy, but even though interest rates have come up just a bit since the spring, they are STILL lower than they ever have been before.

What does this mean? It means your hard earned dollar can now get you a LOT more house for the money. And here in Los Alamos, this is great news! The basic laws of supply and demand mean our home prices tend to carry a higher than average median value than other areas of New Mexico. But when you have the increased buying power of a record low interest rate, this can go a long way toward bridging the gap.

If you were ever considering the purchase of a home, now is the time!

Remember that your actual mortgage payment includes more than one line item. You are likely paying $ toward your principal balance and another sum for taxes and insurance to an escrow account. You might pay mortgage insurance, and of course, you pay interest. By far the largest piece of your monthly payment is very likely the interest payment. That means, if you’ve set your heart on a house just above your initial budget, you might actually find that your budget is bigger than you thought because a very low interest rate will mean that interest portion each month is much less!

When we talk about interest rates for big ticket items like homes, a single percentage point can make a huge difference to your monthly payment. This is why pre-qualifying and getting a pre-approval from a reputable lender for your new home purchase is such a vital part of the process. Once you have started working with a lender, you will have a better picture of just how much buying power you have. Once you have this information in hand, it’s time to go shopping for that fantastic new home.

Nope. It’s almost never too late to take advantage of record low interest rates!

Don’t worry. If you bought a house in the last ten years or even the last five. Heck, even if you purchased one only a few years back, there are ways that you might be able to benefit from the current low interest rates.

“I love my house! But my interest rate wasn’t nearly as good as I could get now!”

If this is you, then maybe it’s time to refinance. There are several factors that should affect your decision to refinance, but if you love your home and plan to remain in it until you retire from the National Laboratory and head to Florida (or wherever you prefer) it might benefit you to refinance.

Remember that your home has likely appreciated this last year. Homeowners in Los Alamos County are enjoying more equity than ever. And while banks aren’t too keen to do cash out refinancing like they did a decade ago, you might still qualify for a better interest rate. You’ve been a homeowner for awhile now, right? That likely means your credit score has been improving. And now your initial down payment has been supplemented by the market value increase of your home! Equity means a bank might look even more favorably on a loan for your home. Imagine that! More buying power while buying something you already own. You might even look into a fifteen year mortgage and discover a way to pay off your big ticket investment even sooner than anticipated!

“We’ve only been in our house for a short while, but we need something else!”

Low interest rates are great news for you if you fall into this category. And don’t worry. That’s why so many homes fall into what real estate professionals sometimes call “starter homes”. They’re meant to be a start. A place to get your feet wet as a homeowner. Maybe that two bedroom quad was a snug hideaway for you and your spouse a few years ago. But now you have a toddler and another baby on the way and you’re busting at the seams.

Well, this is the perfect time to sell and move into something bigger. Remember, low interest rates mean other people looking for “starter homes” will have the buying power to do just that. Buy your home! Then you’ll be able to turn around and use your equity and that lower interest rate mortgage to purchase a home that better fits your changing needs.

So, don’t wait another minute if you’ve been thinking you can’t possibly afford the home you want. You will never know until you try. Give me a call today and let’s chat about ways to exercise YOUR buying power!