Incredibly interest rates have hit below 4% to finance a new home. In the last year it has dropped about 1%. Is this the new normal? Are we going to be in a period of where super low interest rates are going to stay low? Take a look at Japan. They went to low interest rates starting in the early 1990’s and never have been able to increase their rates. We might be on the same path.
It would be easy to discuss the why, but I would like to discuss a shift in mindset. The old paradigm is that when people retire they should have their home paid off. Maybe not now. I really believe people should finance at least of a portion of their empty nester home purchase. I would not have said that through much of my career. Why did I change my mind?
It’s simple. The government is incentivizing people to borrow money at historically low rates. If you borrow money at 3.6% to purchase your home, you then could take the money you would have put into purchasing the home and invest it and you will come out ahead. Let me explain.
It is not that hard to find a safe investment that pays 6%. You will earn more than what your mortgage obligation is. That will help fight off future expenses on your home. Thing like deferred maintenance, real estate taxes, insurance all cost more as time passes. Your earnings on your investment will hedge you against those future increases.
Our Model Home (7909 NE 78th Street—across from Crossroads Church) is open Fridays-Mondays from 10a-4p.
If you are thinking about downsizing…. Consider Quail…. you’ve earned it!!