It has been more than a year since the Federal Reserve — the nation's central bank — lowered prime interest rate to near zero in response to financial challenges during the coronavirus pandemic.
Since we don't know how long interest rates will remain low, now may be a perfect time to buy a home, refinance current loans, or consolidate your debt.
Below are some tips on how you can take advantage of low interest rates during this favorable interest climate.
Please note: Interest rates are determined by your bank lender based on certain criteria, including your credit score and annual income. Discuss your options with a bank representative.
Invest in property
Since houses typically increase in price over time, owning property can be an investment in your future. Plus, being a homeowner may come with the tax benefit to allow deduction of mortgage interest and property taxes on your annual income tax return. Check with your tax professional for guidance.
With interest rates at historic lows, it is the prime time to buy a home — whether it's your primary residence, a second home or an investment property.
WaFd Bank offers mortgage loans with competitive interest rates. And, if you are an existing client, WaFd Bank offers discounts on closing costs when mortgage payments are made from a WaFd Bank checking account. Other helpful options through WaFd Bank include a cross-collateral program that will help you buy a new home while trying to sell another home; asset-based loans; loans with lower down payment options; and custom construction loans, among others.
Interested in buying property? Crunch the numbers using WaFd Bank's home loan calculator.
Refinance current loans
Now is also a great time to consider refinancing existing home, auto or student loans. Refinancing means you will pay off your old loan by taking out a new loan with a lower interest rate. This may save you money by bringing down your monthly payments. If you take the money you save by paying lower interest fees and continue making the same payment as before refinancing, you will be able to pay off your loan even faster by applying more funds to your principal balance.
WaFd Bank offers several mortgage refinancing options. Current clients with a home loan through WaFd Bank have access to low-cost modification and refinancing options (possibly including little to no closing costs).
Open a home equity line of credit
A home equity line of credit (HELOC) uses your home's equity — the difference between what you owe on your home and what your home is currently worth — to help you pay for home improvement projects, your child's education or other expenses, like consolidated medical bills or credit card debt.
Qualifying homeowners may be approved to borrow a certain amount of money and access the funds as needed. If you do not end up withdrawing any money from the HELOC, you will not owe anything on the loan.
A HELOC may be more affordable than making large purchases by credit card or by starting another type of loan if you qualify for a competitive interest rate and do not have to pay annual renewal fees.
Learn why WaFd Bank is a great option for a HELOC.
Transfer credit card debt
If you opt to not pay off your credit card debt with a HELOC, consider transferring your current credit card balance to a credit card with a lower interest rate. This will help you pay off your debt more quickly.
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