Mitchell Homes Fredericksburg
A lot has changed in 12 months. A year ago, the economy was humming. Unemployment was at historic lows, and the Federal Reserve was slowing raising interest rates to slow the economy and reduce inflation.
Many economists and business policy experts predicted that trend would continue for the foreseeable future. Then, the economy started to slow late last year and slowed drastically when the COVID-19 pandemic struck the United States in March. As a result, long-term interest rates in the United States have plunged to unprecedented levels, similar to what was seen during the Great Recession of 2008.
While the current economic climate has created real challenges, it has also created opportunities. You can improve your financial health as well as invest in real estate. Here are a few ideas:
Your credit score is extremely important. Without a quality credit score, you cannot purchase a car, buy a home or qualify for a credit card. Often, you even need a good credit score to get a job. With today’s interest rates, you have easier access to credit at a reasonable rate. You can use that to pay off debt or obtain credit. The lower interest rates allow you to establish a consistent record of paying credit off on time, which will raise your credit score.
You probably have a variety of debt. You might have student loans, credit cards and car loans. Now is a good time to consolidate your debt at a lower interest rate. With debt consolidation, you have one debt payment each month instead of multiple payments. If you are unsure if it’s a good idea to consolidate your debt, there are several online tools where you can look at your current debts and calculate future payments from consolidated debt. In general, financial experts say a good rule of thumb for debt consolidation is making sure your debt, excluding your mortgage, doesn’t exceed 40% of your gross income. Low-interest rates allow you to consolidate the debt under one lower interest rate. You move high-interest debts into a lower interest rate, and thus reduce the overall financial burden of your debts.
Despite what you might think, a lot of real estate transactions are still happening during the COVID-19 pandemic, and spring is generally the best season of the year to place a home on the market. There are many buyers who want to take advantage of the historically low mortgage rates and purchase a home.
In addition, the outlook in the fall is unclear, so it might be a safer bet to place your home on the market right now. The economy is still absorbing the full impact of the outbreak, and selling your home today takes advantage of the current real estate climate.
Student loans are a huge burden for many people. The federal government is offering several programs to help alleviate the financial burden of student loans during the COVID 19 outbreak. Student loans secured through the federal government are collecting 0% interest. That means everything you pay on the loan goes directly to the principal.
Another route you can take is refinancing your student loans. Most student loans are between 6% and 9% interest. With the current low-interest rates, you can lower the interest rate on your student loan. Some companies are advertising student loan refinancing at between 3.5% and 4.5%. That means you would have lower monthly payments and can pay off the loan more quickly.
Homebuilders are still constructing homes. Construction was deemed an essential business, and construction crews are still building homes in Virginia, North Carolina, Maryland, and other states despite the stay-at-home orders.
This creates a huge opportunity. Given the record-low interest rates, you can afford to build that dream home. Payments will be lower and thus make the house affordable. As well, you can add more of the custom features you desire. You could add that granite fireplace you always wanted or that second oven in the kitchen. The low-interest rates give you greater flexibility, and the ability to build out the home you always wanted.