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If you're looking to buy a new home or refinance your current one, you might be breathing a sigh of relief right now. Mortgage interest rates have dropped.
This is good news for anyone who is thinking about buying a house because it means that you can get a loan for less money. However, rates are still higher than last year and there are some important things to know if you are thinking about refinancing your home, buying a home, and/or getting a home loan.
Mortgage rates have been volatile lately. The interest rate on 30-year fixed mortgages has been especially affected by this volatility, as it is correlated to the federal interest rate otherwise known as the overnight rate lending rate.
Many experts believe that the government has an agenda when it comes to lowering inflation rates. They feel that they have not yet achieved their goal, so they will continue to increase the federal interest rates until they do. This means that 30-year fixed mortgage interest rates may fluctuate even more than usual in the near future.
There's a lot of talk right now about what the 30-year fixed mortgage interest rate will do. And while it's true that we can't really know what will happen with interest rates until they happen, we can make some educated guesses based on recent history.
Inflation has been a problem in the United States. When prices go up, so does inflation. And when prices go up, so do interest rates. This is because when inflation is high, people need to be paid more money to borrow it—so they can make more money off of it.
The opposite is also true, so as inflation slows, prices will stabilize, and rates will drop. We expect this to happen sometime in 2023.
With an interest rate drop in 2023, it will be a good time to take advantage of the opportunity to refinance your HELOC [Home Equity Line of Credit], credit card debt, student loans, and auto loans.
Credit card debt is one of the most expensive types of debt you can have. It can cost you up to 20% in interest per year! This means that if you have $10,000 in credit card debt at 20% interest rate, you may end up paying $2,000 in interest over the course of a year. In addition, your credit score may be affected it will take time to recover. Next year, you can refinance and lower this rate by paying off credit cards with your home's equity.
Student loans also have very high-interest rates that can range from 4% to 15%. This means that if you borrowed $200,000 for college and have an 8% interest rate on your student loan, it may take decades to pay off this loan. Again, if you own a home, you can refinance and use your equity to secure a lower interest rate.
Regardless of your debt. 2023 will be a great time to restructure your finances and look at refinancing your home.
However, you don't want to wait to look at your options for 2023. Give us a call today, (727) 784-5555, we will look at your current debit & credit score. We'll help you create a plan and educate you about all your options.
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