5 things to consider while interest rates are low


low_interest_ratesThe days of low interest rates will not last forever. While the Federal Reserve have vowed with keeping the interest rates below 6.5% and the rate of inflation below 2.5%, the stock market is hitting new records and we are seeing drops in unemployment.

It’s important for consumers to take advantage of the current lower interest rates, and strike why the iron is hot, helping to save on planned purchases.

The following are five actions you might consider taking advantage of while interest rates are low:

Buy a home! Yes, lower interest rates are perhaps not reason enough to dive into home-ownership, but those of you who have been seriously considering it, the time might just be right for you. Long-term, fixed rate mortgages are the lowest in decades, and we are seeing home sales and prices starting to rise in many markets.

FHA guidelines presently suggest no more than 43% of gross income should be used for financial obligations, like debt and housing.

Refinance. Do you already own a home? If you have an adjustable rate mortgage and have plans to continue to live in your home, then it is an ideal time to refinance your long-term, fixed rate mortgage. If five years ago you purchased a $225,000 home at a rate of 7%, your payments have been about $1,500 a month, and you have paid around $76,000 in interest. Refinancing now at 3.5% for 15-years on the remainder of the loan, you will save almost $175,000 over the life of the loan. Although your payments might increase about $25 a month, you will pay off your home almost 10 years sooner!

Buy a car. Many car manufacturers have offers and options for special financing, as well as various incentives to entice potential car buyers into buying. Know what the vehicle you want to buy, do your research and comparison shop to insure you success at getting the best deal for yourself.

Pay off debt. It’s always a good time to pay down debt, even if we have not seen a hoped for drop in credit card interest rates, and our savings accounts are barely paying off, if at all, these days. We will always be better off paying off our debt in the long run. If you have maintained an on-time record of payments and have continued to make at least the minimum payments on accounts, then it might be a good time to negotiate lower interest rates with creditors.

Review all of your financial options and talk with a financial advisor about different alternatives to help you in areas of savings and personal money market accounts. With the currently lower interest rates, it might be the right time for you to increase the scope of your portfolio and find ways to earn greater return on savings or other investments.

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