But it’s important to move quickly: mortgage rates can bounce around a lot. A significant news development can send them moving back upward very quickly.
So now’s a great time to lock in today’s low mortgage rates while you shop for a new home, or finalize a refinancing deal.
Why buy now?
Buyers and refinancers both benefit from low interest rates. But if you’re currently renting, finally joining the ranks of homeowners may be even more beneficial. A new forecast projects that California home prices will continue to rise another 2.5% through 2020. If that comes to pass, the median price for a California single-family home will increase from $593,200 to $607,000.
Meanwhile, monthly rents in Orange County are climbing at a rate of 5.5% per year.
The longer you wait, the more you could get hammered by three powerful forces working against you:
1. Rising house prices in Orange County;
2. Continued rent payments, increasing an average of 5.5% per year, and;
3. The possible increase in mortgage interest rates that would make monthly payments even higher in the future.
Home prices in both Orange County and Los Angeles County are climbing faster than wages – and have been for years. So it’s important to take advantage of windows like this: Most working families here in SoCal can use every break they can get!
If you plan on remaining in Southern California for more than a few years, the most opportune time to buy is right now.
Why Lock In Your Rate Now?
When interest rates are this low, refinancing is almost a no-brainer – even if you bought as recently as last year. Taking advantage of today’s low rates may generate multiple benefits:
o Monthly savings. You may be able to significantly lower your monthly mortgage payment. Simply dropping a $300,000 mortgage balance from 5% to 4% can generate $178 per month in savings. You can now use that free cash flow for anything you want. That’s as good as tax-free income!
o Flexibility. You can extend the term – lowering your monthly payment even more – or shorten the term, paying off your mortgage and building home equity faster. You choose.
o Get cash out. If you have equity in your home (your home is worth more than you owe on it), you can use refinancing to get cash out for any purpose you choose. Examples:
• Pay for college costs;
• Pay off credit cards or other higher-interest debt;
• Purchase a vehicle;
• Raise a down payment on an investment property;
• Pay medical expenses;
• Pay for your child’s wedding;
• Start a business;
• Eliminate mortgage insurance premiums;
• Completing home improvement/renovation projects;
• Get a cash emergency fund in the bank for the unexpected;
• Take time off work for medical treatment with a sick loved one;
• Buy a 2nd home;
• Contribute to a retirement account;
• Contribute to a Section 529 Plan or Coverdell Education Savings Account;
• Contribute to a Health Savings Account (in conjunction with a qualified high-deductible health plan);
• Repay a 401(k) loan that’s coming due;
• Avoid having to take an early distribution from retirement accounts (and incurring taxes and penalties);
• Provide cash for divorce settlements (one partner uses the cash to buy out a former spouse’s interest in jointly-owned property);
Important note: Anyone taking a cash-out refinance should bear in mind that there is some risk involved. These mortgages are generally secured by your home. If you are unable to continue making payments on your refinance mortgage, you could face the risk of foreclosure.
Rates and terms vary based on a variety of factors, including your credit history, nature of your income, debt-to-income ratio, your home equity, size of your loan, whether you’re refinancing a personal residence or an investment property, and the lender.
Lock in your rate now.
Are you ready to make your move? Call Pacific Home Loans today at (949) 494-4861. Or fill out an online application today by clicking here.
Whether you’re refinancing, you’re a real estate veteran or buying your very first starter home or condo, we’re ready to help.
We look forward to working with you!