How to Take Advantage of Low Interest Rates to Buy Your Dream Home
The coronavirus pandemic has impacted financial markets worldwide. Although that might seem like a negative, there is a silver lining: Interest rates are extremely low right now. What’s more, Forbes reports that the Federal Reserve has pledged to keep interest rates near zero until the year 2023.
This makes the present moment perfect for buying a house. Fox Business suggests seizing this opportunity to pay down debts at reduced rates. If you take out a mortgage now, you can enjoy minimal interest as you pay back your home loan.
If you’re looking for an abode somewhere sunny and close to the coast, LA Exclusive offers premium listings in Santa Monica, Malibu, and the Pacific Palisades. These are popular areas where you can enjoy being near the beach — and thanks to low-interest loans, these properties are more accessible than ever before. Read on to discover how you can take advantage of the current market’s low interest rates to find your dream home.
Figure out how much money you need
Before you start searching for real estate, create a budget. To avoid having to pay private mortgage insurance and to secure favorable terms for your mortgage, you should make a down payment of at least 20 percent. If you already own a home and are looking to sell it and move, you can use the income from your sale for your down payment. You can figure out how much you can expect to get from the sale using a property value calculator. Although this isn’t 100% accurate, it should give you an estimate of what to expect.
Define what you need in a home
In addition to figuring out your finances before you start searching real estate listings, you should also write down exactly what you’re looking for in a property. How many bedrooms and bathrooms do you need? Do you want a garden for your pet? Are school districts a consideration? If you’re thinking of starting a home-based business, you probably want room for a home office. Before you start, set up your business as a limited liability company. An LLC offers tax advantages and protects you personally in case of liability issues. It will also be easier to write off expenses related to your home office. Use an affordable business formation service instead of a pricey lawyer to save money when setting up your LLC.
Apply for financing
Once you know what type of property you’re looking for and where, you can further determine just how much you can expect to pay for a new property. You can then use this information to apply for financing. When approaching realtors or buyers, it’s best if you already have a pre-qualification letter from your lender. This demonstrates to sellers that you are a serious buyer and gives you the power to make a legitimate offer quickly when you find a place you love. How do you get this valuable paper? Once you’ve identified a lender, contact them and request pre-qualification. They will give you an application to complete.
This step-by-step guide explains how you can take advantage of current low interest rates to get a house you love. That said, buying a new home is a major investment and should never be rushed. Don’t stress. As mentioned, interest rates are expected to remain low in the years to come. Start the home-buying process now by following the above steps and you will be able to reap the rewards of this unique financial situation.
For help buying or selling a property in the Santa Monica area, trust LA Exclusive. Find out more about working with us on our website.