Jo Dallas, Peoples Bank
The coronavirus has impacted nearly every sector of our economy, including the real estate market. If you’re wondering if now is the “right time” to buy or refinance a home, here are some things to consider.
- Mortgage rates are at historic lows. I’ve experienced many ups and downs in the housing market over my 30-year career as a lender. We’re now seeing record-low interest rates coupled with record-high demand – and record-low inventories.
- Online applications facilitate remote loan approval. You can now complete a loan application online. We’ve implemented a new intuitive and user-friendly online application system at Peoples Bank that provides clear instructions on what needs to be submitted electronically for loan authorization, like pay stubs, tax returns, and other qualifying documentation.
- Low rates bring more buying power. Lower rates allow borrowers to buy a more expensive home or pull more cash out of an existing home to do a remodel or other home improvement project. This chart gives you an idea of how interest rates correlate to buying power. While longer-term loans have higher interest rates, they offer lower monthly payments, which provide more flexibility with cash flow. A shorter-term loan offers a lower rate, but a higher monthly payment.
- The best time to refinance is unique for each buyer. I often get asked what the “break-even” point is for customers looking to refinance a loan. The truth is the answer is different for everyone. Are you seeking debt consolidation? Do you want to lower your monthly payment? Do you need cash to make improvements to your home? How long do you anticipate owning the home? A lender can help you determine if it’s the right time to refinance your loan.
All signs point toward rates remaining low, potentially through next year. However, the market changes quickly. I recommend meeting with a loan officer to discuss your unique situation and get your questions answered. While COVID-19 has pushed many of our interactions online, our door is always open, just as it was before. Whether you’d like to schedule an in-person meeting, a phone call, or a video call, we’re happy to meet with you in the manner that works best for you.