We are all hearing the doom and gloom of the Coronavirus and yes it is a serious event, however there is a silver lining surrounding it that you might be able to take advantage of. That is if you are ready.
Yesterday the US Federal Reserve made an unexpected move. They cut the interest rate by half a point! This was done in response to the COVID-19 and the potential impact to the US economy. The major concern by the Fed is consumer confidence amidst this Coronavirus event. They know that if people panic and stop spending the economy can go in to a recession. So to prevent this they lower the borrowing rates for everyone. You may be asking ok so what and how can I take advantage of this opportunity? For most of you, you are in a perfect position so how to do this?
Here are three things you can do.
Consider refinancing your home. Now there are five questions you need to answer before you can refinance. I will list them a little later.
Rightsizing your home. If you are a homeowner you have a distinct advantage. There is a housing shortage in the US thereby making your home more valuable. You can right size! If you are an empty-nester you can get a smaller home or if your family is growing you can get a bigger one. You might be thinking, if I sell I will have to buy and prices are up. Well yes and no. Now this leads to point three.
Buy a home. This one is really simple to grasp. If you are paying rent, you are helping someone else build wealth. If you buy a home, you are helping yourself build wealth. The key is getting the right financing. You want the lowest rates, down payment and costs. Here with the Right Realtor and proper opportunity can make you a home owner. Due to the interest rates being at 50 year low, people are letting you borrow money for almost nothing. To answer point two, the rates are so low that they offset the increases in value. So for the same or less monthly payment you can increase in home value, right size and possibly still send money to your bank account at closing. This is what investor do to become wealthy, why not you.
So how does this all work? Like I mentioned earlier, there are five questions to answer before you know if you are a candidate to take of this opportunity.
How long are you planing to stay in your home? The key is to stay long enough to offset the costs of getting the refinancing but as I mentioned before with the Right Realtor the costs could be non-existent. Additionally, if you are planing to move in less than 4 years there could be more savings.
How much will you save? You have to consider this in monthly and overall savings. If the difference in your current interest rate and what you can get is greater than 3/4 of a percent, you should consider refinancing. As an example if you are paying 6%, you could be saving $400-$500 per month.
Are you paying mortgage insurance? If you refinance you can potentially eliminate it and this along with the lower interest will reduce your payments.
Do you have debt? Now here is the kicker. All lenders will look at your debt to income ratio and you must meet the requirements to qualify. If you have a ratio of 50% or greater, you will have to clear up some of your debt. Sounding like a broken record with the Right Realtor you can address this without spending a lot of money. You might also qualify to refinance and payoff these debts. If you are considering this, I would highly recommend you speak to a housing consulor so you do not repeat your situation after the refinance.
Are there lending deals? The short answer is yes! The follow up is, not many lenders do a great job of advertising it. I constantly review their offers as I work with many clients looking to buy a house. The key is to have someone with an excellent network of lenders so that you can compare and find the right offer that works for you.
The great thing of this opportunity is that there is little risk and all upside for the consumer. In today's world were the rich seem to be getting richer and the middle class gets screwed here is an opportunity for the middle class to benefit from events like the Coronavirus. This is what investors do and if you have the right scenario you should take advantage of this unprecedented opportunity. If you would like help to determine if this opportunity is right for you feel free to contact me. I have a network of national lenders and over 170,000 real estate professionals ready to help you.
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