As we enter 2021, the United States economy remains on shaky ground as rollout of the COVID-19 vaccine ramps up and a new administration prepares to take office.
This means a continuation of what we have been seeing in the housing market. Last year, mortgage rates fell more than a full percentage point, hitting a new historic low 15 times. This drop in interest rates is continuing to make housing more affordable and drive homeownership, as today’s low rates provide you with some significant benefits. Here’s a look at three of them.
1. Move-up or Downsize: One option is to consider moving into a new home, putting the equity you’ve likely gained in your current house toward a down payment on a new one that better meets your needs – something that’s truly a perfect fit, especially if your lifestyle has changed this year.
2. Become a First-Time Homebuyer: There are many financial and non-financial benefits to owning a home, and the most important thing is to first decide when the time is right for you. You have to determine that on your own, but know that now is a great time to buy if you’re considering it – just look at today’s appreciation rates.
3. Refinance: If you already own a home, you may decide you’re going to refinance. It’s one way to lock in a lower monthly payment and save more over time. However, it also means paying upfront closing costs, too. If you want to take this route, you have to answer the question: Should I refinance my home?
Why 2020 Was a Great Year for Homeownership
At the beginning of 2020, the average mortgage rate was 3.93% (substantially higher than it is today). If you waited for a better time to make a move, market conditions have improved significantly. Today’s low mortgage rates are a huge perk, so it’s a great time to get more for your money and consider a new home.
The chart below shows how much you would save per month for an average-priced home (based on today’s rates and average income) compared to what you would have paid if you purchased the same home in 2019:
If you’ve been waiting since last year to make your move into homeownership or to find a house that better meets your needs, today’s low mortgage rates may be just what you need to get the process going.
Wondering how you can best take advantage of the current housing market? Fill out the form below to request a consultation with one of our mortgage advisors. They can prepare a free Total Cost Analysis report for you that will help determine which mortgage option fits your needs with the lowest overall cost. It will also show you strategies to increase your equity and wealth in real estate by choosing the best mortgage strategy for your situation.