The mortgage rates for 30-year fixed-rate loans have dropped to its lowest level since 1953, hitting 4.3 percent last September, according to the government-sponsored mortgage firm Freddie Mac.
Likewise, 15-year rates have also become more affordable as they hit an average of 3.8 percent. This means that borrowers with good credit rating could still get better and lower interest rates.
But Freddie Mac says that it is important to take advantage of these low interest rates the soonest time possible as they could gradually increase at the start of next year, with the average 30-year loan possibly hitting 5 percent at year's end.
If your credit score is at least 720 or higher and you have at least 20 percent home equity, there are several ways that you can do to seize these low interest rates as perfect opportunities to relieve your cash flow, increase your Real Estate holdings or even to cut your mortgage terms.
The analytics firm, Core-Logic, says that more people now prefer to avail of 15-year mortgages over 30-year loans, because of two main reasons: lower interest rate and quicker loan retirement.
Of course, if a borrower finds the loan unmanageable, he could always refinance it to a 30-year term. But a refinancing is actually not a good solution for those who only have a few months or years left on their mortgage or for those who are thinking of moving to another place.
These low interest rates will also help borrowers manage their cash flow better. There are many reasons how a family could be cash-strapped and these include increasing educational expenses, credit-card debts and others. But whether one aims to free some money for an emergency fund or to put it in some investment, a 30-year loan could be a potential solution.
In this case, the lower monthly payments will enable the borrower to have more cash-on-hand, which he could use for other purposes.
Borrowers can also take advantage of these low-interest rates to beef up their investments, if they can afford another mortgage loan.
With falling home prices and interest rates cut, it is not difficult to find an affordable property to invest in. This property could be an investment property and could even be used to pay for its own mortgage as when the borrower opts to rent the place out to another family.