Most people are familiar with the term “interest rate” when it comes to credit cards or car loans, but they may not know how interest rates affect their purchase of a home, especially if they are a first time homebuyer. The interest rate is the amount it costs to borrow money and is usually calculated in a percentage. If you are borrowing a large amount of money, you will want to keep the interest rate low so that you can keep the overall cost of the loan as low as possible. Many short-term loans have higher interest rates so that the lender can make as much as possible over the course of that term.
Who’s In Charge?
The Federal Reserve is in charge of the Federal Funds rate, the rate that banks use when borrowing from one another, and it is the overall rate that people consider when they are discussing interest rates in the market and when it would be the best time to purchase a home. If you are unsure if it’s the best time to purchase a home, you’ll want to keep an eye on the market by studying interest rates.
Interest Rates Rising
When interest rates are rising that usually means the economy is in a good position and is the most important things to consider when deciding when you are going to purchase a home. Unemployment levels are also a good indicator of the market since that means that people are typically putting money back into the economy, therefore interest rates will generally increase.
Interest rates are not only important when you are considering purchasing a home, but they can be very important to you if you are selling a home as well. Many people choose to wait before selling their home, so they can make as much as possible in profit from the sale. You’ll want to be sure you don’t sell your home too early, especially if the home is your primary residence. If you own your home for at least 5-10 years, you will have a better idea of the overall market and determining when to sell will be that much easier.
Knowledge Is Power
Whether you are buying or selling,research will always help you when making a decision. You’ll want to do a fair amount of research on the market in your area as well as the market in surrounding areas. You’ll want to shop around and compare rates to make sure you are getting the best interest available for your area and situation.
Lastly, interest rates are important to those that are investing in a home. Multi-family homes like duplexes and triplexes can be a great way to turn a profit if purchased at the right time. Investors like to target areas that are growing and popular so they can purchase and rent out to people for short or long rentals as the profit margins are great when the market is in a positive place.
Reach Out Today!
Interest rates matter for many reasons and can be a little confusing to understand if you are just getting started on your research. We want to make sure you are getting all the information you need to help determine when you should purchase or sell some property. We would love to help you out in any case, so please reach out to North Star Mortgage Network in Jacksonville, FL today!