Although this has an impact on every form of real estate sales, purchases, and property ownership. The question you should ask is how will this impact me either in selling or buying a home or keeping my home.
I hate to be a pessimist regarding this topic because I am pretty much an optimist.
If Selling: Because the change in the interest rate will not be several percentage points, more like a quarter of a percentage point, the overall impact will be minimal. It may have helped a few but generally it will have minimal impact.
If Buying: Again, because no major change in the interest rate, the overall impact will be minimal. A quarter of a percentage change will help some but if you don’t qualify for a $300,000 home now, the likelihood of qualifying with a .250% change is still low. I’m sure some will read this paragraph and challenge me and that’s ok.
If keeping your home: You should be looking at this change more closely. Those who already own their home and bought when the rate was closer to its peak. This rate reduction could help you be eligible for a lower payment in addition to possibly reducing or eliminating the Private Mortgage Insurance (PMI) or refinancing out of an FHA Mortgage to a Conventional Mortgage and also eliminating or reducing the mortgage insurance and which will reduce the payment.
Anyone not considering refinancing their current situation is possibly missing an opportunity.
Two key point to consider if refinancing:
- Closing Costs
- Will interest rates continue to come down
Key Point #1: There is always costs associated with refinancing. So look at all the numbers and if you have an acceptable savings, move forward. Remember this may also be a good time to review your homeowner insurance and possibly get a lower premium.
Key Point #2: This is kind of related to Point #1 in that if the savings from the reduced rate and closing costs is not acceptable. Will the rates continue to come down? If so, perhaps the next drop in rate will be the right time to refinance.
I hope this helps. Please send any feedback or questions.
