Federal Reserve Interest Rate and Your Home Value

Written by Posted On Thursday, 19 September 2019 08:23

It’s all over the news, the federal reserve has lowered its short-term interest rate. What does this really mean to me? In this article, we’ll break down how this impacts homeowners and what to be aware of, especially if you’re thinking of buying or selling your house.

The federal reserve has cut its short-term interest rate, also known as the federal funds rate, to 1.75% to 2%. This is the first time in 3 years that the rate has lowered. A lower interest rate simply means that the cost of borrowing money is cheaper, and more easily accessible. If more people have access to cheap money, they may be more inclined to buy properties. This may lead to more buyers on the market. With simple supply and demand economics, if demand is higher, the cost of the supply may go up.

House Seller’s Perspective

What does this mean for my real estate? This could be a good time to sell your property because you might have access to more buyers in the market. These buyers may potentially bid on your property and you can get a higher offer for your home. Obviously, plenty of factors come in to play, especially the condition of the house. If the house is not up to current standards, you might still not be able to find a traditional buyer that can take advantage of the lowered interest rates. If your house needs work, you may need to find local house buyers in Houston that pay cash for your house.

House Buyer’s Perspective

If you are looking to buy a house, you can get a great benefit each monthly with a lower monthly payment and even bigger benefit in the long run because you will pay less interest on your loan.

For example, if your mortgage interest is 4.5% on a 30-year, $100,000 loan:

Monthly Payment (Principal and Interest Only) would be $507.45.

Over the 30 years of the loan, this would be $82,678.36 in interest paid.

If your interest rate is 3.5%:

Monthly Payment would be lowered to $449.57.

Over the 30 years, the total interest paid would be $61,844.42. That’s over a $20,000 savings.

There are benefits to both situations, whether you are looking to buy a house or sell a house. The important thing is to be aware of the current interest rates so that you can be prepared to get the best value for you.

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Tino Jaimes

Hi my name is Tino Jaimes, a local real estate investor in Houston, TX. 

www.sunrisehousebuyerstx.com

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