I Got a 3% Interest Rate – Now What?

It’s been such a wonderful Refi Ride for the past 40 years. Interest rates down, home prices up. Beautiful scenario for us homeowners and real estate investors. Many of us continued to refinance our homes every few years as the rates have continuously dropped since the 1980s.
 
Now interest rates are leveling out and creeping up and homeowners aren’t sure what to do. The good news – we have options.
 
Investing in ourselves is wise and property is an excellent choice. Home prices will rise; they always have. Unless we flip houses for a living, we don’t have to worry about the buy-high / sell low scenario because home purchases are a longer-term investment.
 
Heck, it doesn’t even take that long anymore to see terrific equity accumulation. I’ve personally seen many Colorado, California, and Nevada neighborhoods increase their equity by $300,000, $400,000, $500,000 or more – in just the past 10 years.
 
Here are four actions we can take to capitalize on our real estate investments today. Plus, for each item, I’ve included factors to consider and benefits we will enjoy…
 
PURCHASE

• Factors:
  • Down payments: They tougher for some but can be obtained from gifts or cashout from existing properties. Also, there are opportunities for first-time buyers, veterans, and options for minimal down payments of just 3-10%, which can be surprisingly affordable.
  • Repairs: We can’t call the landlord to fix the leaky faucet. We own it; we fix it (or call a pro!)
• Benefits:
  • Equity: By invest in ourselves and with each payment, we build equity.
  • Liquidity: We can borrow against the value of our home, so cash becomes easier to obtain.
  • Wealth: With real estate, our capital builds rapidly, in most cases, faster than other long-term investments.

 
SELL

• Factors:
  • Lack of preparation: Homes with poor appeal may result in fewer offers and lower dollar amounts; important items when selling include staging our homes properly, pricing it right, and market timing. Get a good realtor! And if you don’t have one, I do – and I’m happy to refer you!
  • Packing: Some of us like it; some don’t. If you don’t, there are companies that will pack for you.
• Benefits:
  • Cashflow: This is wonderful in paying off debt and building a savings fortune, especially if we’ve been building equity for a while.
  • Right-sizing: Lifecycles change about every 7-10 years; and to properly adapt, we tend to move for a specific reason – marriage, kids, downsizing, relocating. Selling provides opportunities to right-size our home for our present stage in life.
  • Financial Mix: Just because we’ve secured a reasonable interest rate, doesn’t mean we’re stuck in our home forever. Interest rates are just one variable in a greater mix of our financial decisions. We can sell when the time is right for us to obtain great benefits.

 
REFINANCE

• Factors:
  • Standard fees: There are some minimal charges up front, but if done well, plenty of financial gains shortly thereafter.
  • Warning: Some brokers charge a lot of money up front to ‘buy down’ the interest rate. The rate may look competitive, but it can take years to break even on your monthly payment. DO THIS: Save yourself that headache and cost – and work with a reputable bank mortgage loan officer directly. Yo! I’m available. 😊
• Benefits:
  • Improved interest rate: If our home interest rate is higher than the going market, it may be wise to refinance our property. This provides us with lower monthly payments.
  • Cashout: This is an option when we refinance; we can use the money to pay off debt, pay school loans, remodel, or simply have some cash set aside for peace of mind.

 
HELOC

• Factors:
  • Rates: These home equity lines of credit allow us to pull money from the equity in our homes. They include adjustable rates tied to prime and based on our loan-to-value; the rates fluctuate and are commonly higher than purchase or refinance rates.
  • Limitations: There are maximums in how much we can borrow based on the value of our home.
• Benefits:
  • Limited interest rates: We only pay interest on the amount borrowed, not the entire line we’ve secured.
  • Borrowing Flexibility: Once established, we can tap into the amount we need, when we need it.

 
Find a partner you trust who is willing to walk through options with you – and no matter the market, let’s turn these next 40 years into a financial boom for ourselves!
 
I hope this was helpful.
 
Yours,
 
Blaise
 
Blaise Patrick Tracy
Loan Officer | NMLS #2299123
mobile 310.200.9180 | office 303.585.4167
blaise.tracy@usbank.com | linkedin.com/in/blaisetracy
 
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