. Opportunities are given with these low mortgage rates and also the real estate market being so slow. Since prices of homes are as low as mortgage rates are, short term losses are taken by numerous for the gains that come with a lower interest rate. Many are losing their homes, but coming out ahead with what they get instead. Others are learning that spending their own cash to refinance mortgages is one of the safest investments to make these days.
Mortgage rates and the housing market
With the U.S. housing market in the toilet, the Wall Street Journal reports that economists say trading up to new homes or refinancing existing ones can make good financial sense — even if it means giving up cash to get out of an underwater mortgage. Better homes are available to everyone who is willing to make the sacrifice with their mortgage. Since with mortgage rates so low, monthly payments of larger homes are nevertheless manageable.
Cash in or cash out
Most people want extra money around which is why they prefer “cash out” financing. Oddly enough, more people are interested in “cash-in” refinancing, according to the Los Angeles Times. Considering there isn’t really much you can rely on anymore when it comes to your investments, your home is probably the best way to go. A third of everyone who refinanced their home in 2009’s 4th quarter all put more money into it than money they could have taken out of it.
Invest in homes wisely
Some individuals are opting to pay down their mortgages early. Totalmortgage.com reports that interest saved is interest earned. When paying down a mortgage, the sooner it can be paid off, the more money can be put towards other investments. It will help quite a lot of people to invest in real estate this way. Quite a few people just try to make it so their loan can be a 15 or 20 year loan instead of having to pay it off over 30 years. This sets them up to conserve thousands of dollars over the life of their loans, and their monthly payments are lower than they were before.
Additional reading
Wall Street Journal
online.wsj.com/article/SB10001424052748704421304575383490870014662.html?mod=WSJ_hpp_sections_personalfinance
Los Angeles Times
articles.latimes.com/2010/jul/11/business/la-fi-lew-20100711
Totalmortgage.com
totalmortgage.com/blog/mortgage-rates/low-mortgage-rates-afford-unique-housing-opportunities/5198
