Do Current Interest Rates Warrant a Mortgage?
By Milo • 9/24/2021
If you are currently in the market to purchase a home, you know that it’s a little wild out there. A Redfin study in June 2021 showed home prices across the U.S. surging almost 25 percent year-over-year, with the availability of homes for purchase plummeting 40 percent. This trend has been driven by record-low mortgage rates during the pandemic.
People are changing jobs, learning that they can work from home, and becoming more flexible with living options in general. As a home buyer, understanding financing options and availability is imperative to knowing your power in the market.
The Benefits of Cash
Cash buyers can often come to the table with a fast close, making the option more attractive to sellers in a very competitive market. Buyers paying with cash don’t have to pay interest over time or wait for home loan programs to come through for them.
Many people can’t fully pay for a home without any lending assistance. However, for those that do, this often means tying up all of your liquid assets into your home. With interest rates at an all-time low, even those with the means to purchase a home with cash are currently seeing the benefits of mortgage offerings.
The Benefits of a Mortgage
Home loans are often seen as cheap money. In other words, taking out a mortgage loan strategically can allow you to put your cash to work in other investments that can offer greater returns. The downside to a mortgage is, of course, the cost of interest to pay the loan back, but when you can lock in a 30-year, low fixed-rate mortgage, investments in other areas can be more lucrative than the money being paid toward interest. There are also some tax benefits to homeownership and mortgages that can be explored, offsetting interest cost.
For many Foreign Nationals, however, home loan programs can be elusive. Traditional bank loans often require excessive paperwork that caters to the U.S. market and leaves a huge gap in lending for non-U.S. purchasers. Milo was created to fill this gap. As a direct lender, our team can provide the utmost customer service experience with a variety of home lending options to meet the needs of foreign nationals who are looking to invest in American homes.
Milo is not a hard money lender, our interest rates are more in line with a large bank mortgage solution, but all resources cater to international borrowers. Our team has years of experience in the lending space and is built of innovative thinkers who work diligently to find solutions for foreign nationals. It’s a market we are personally invested in, driven by a completely online, robust solution that makes mortgage products simple and easy to access.
How to Take Advantage of Low-Interest Rates Without a New Purchase
If you are not currently in the market for a new home purchase, that doesn’t mean you can’t take advantage of the current low-interest rates available. Refinance loan rates are also seeing historic lows. A refinance can lower your current mortgage payment or even allow you to pay out your mortgage more expeditiously without a huge jump in monthly obligations.
Refi interest rates typically fall in line with traditional mortgage home loan programs and often have many of the same requirements. Thus, they have been difficult to obtain without proper documentation in a traditional market, and can take a long time to close. Milo’s refinance loan rates are competitive with major banks but are tailored to the needs of non-U.S. buyers.
Cash-out refinance mortgage rates are also at all-time lows, creating a boon from investors in the U.S. market. A cash-out mortgage refinance gives you the ability to borrow against the value of your current home, using the home itself as collateral. A cash-out refinance is often the cheapest way to accomplish these goals for those looking to borrow a large sum of money to invest in other markets, or other properties.
Both cash-out mortgage refinance options and more traditional refinance home loans do come with closing costs and can extend the life of your loan, so they should be looked at carefully as options. When interest rates are high, these home loan programs are not as lucrative for the borrower, but current refi interest rates provide a variety of options for those in the U.S. market.
Other Factors Driving the American Real Estate Market
As Covid lock-downs and restrictions plagued 2020-21, many industries saw lags in supply chain issues and higher costs for manufacturing. Labor shortages due to sickness and lack of childcare access also created problems for a variety of industries. Costs for new home construction skyrocketed due to many of these factors, and inventory began to decline drastically in relation to demand.
Reaching record lows during the pandemic, mortgage rates have been on the decline since late June. Regardless of which mortgage lending product you choose, now is the best time to take on a mortgage and leave your other assets liquid for future investments.
Mortgage rates, both for traditional home loans and refi interest rates, are expected to rise from these historic lows as the economy begins to improve after the pandemic. Higher interest rates make cash-out mortgage refinancing options less attractive, but they are still an amazing option for homeowners who need a large loan, as personal unsecured loan options always run at much higher interest rates.
Due to changes within the industry, cash-out mortgage refinance options, as well as traditional mortgage options and home refinance solutions, are safer than they were years ago. Milo holds our lending process to the highest standards, striving to be completely transparent from the start of the loan to the closing date, so there are no surprise fees or paperwork. Our completely online process allows for remote closing, and negates large travel expenses and time away from work and the life you are building with your family and friends.
For more information about our home loan programs and current cash-out refinance interest rates for foreign nationals, contact a Milo team member today.