With 30-year fixed mortgage rates around 3%, homeowners who have not refinanced their loans in the past year or two may find themselves in a quandary. miss big savings…
Ninety-year-old investor Warren Buffett wondered what are you waiting for.
He told attendees at Berkshire Hathaway’s May annual meeting in Los Angeles that 2021 will be a great year for borrowers thanks to the Federal Reserve’s commitment to keeping its key interest rate near zero.
“The economy went downhill in March Buffett said. “He was resurrected in an extremely effective way thanks to the actions of the Federal Reserve.”
Mortgage rates have fluctuated this year, but they are still low enough that you could save hundreds of dollars a month by refinancing your mortgage.
Use Buffett as a Role Model
To bolster the economy during the coronavirus crisis, the Federal Reserve cut its key interest rate to near zero last year. More recently, representatives of the Fed made it clear that they will keep rates almost at zero level. until 2023…
“This is an exciting time [for borrowers]”Buffett told investors, adding that the low interest rate environment is” extremely pleasant. “
Although Buffett hasn’t figured out how to take out a 0% loan (at least not yet), his holding company, Berkshire Hathaway, closed last year as it benefited from low Fed rates.
In April 2020, Berkshire said it had received the equivalent of $ 1.8 billion in debt through its Japanese yen bond offering at rates ranging from 2% to simple 0.674%…
You won’t find rates so low on 30-year mortgages, but 30-year fixed rate mortgages now average 2.98%. Despite the recent increase, rates still historically low…
During an interview with CNBC in 2017, Buffett called the 30-year mortgage “the best tool in the world” because of your ability to refinance when you discover a lower rate.
“If you are wrong and the rates go up to 2%, and I don’t think they will, you pay off,” he said then. “This is a unilateral review. It’s an incredibly attractive tool for the homeowner, and you have a one-way bet. “
Refinancing Saves Average $ 287 Per Month: Research
And remember, Buffett knows a thing or two about the housing market. In addition to his company’s investments in energy, insurance and telecommunications, Berkshire also owns HomeServices of America, the largest residential real estate brokerage in the United States. RealTrends…
Many households have taken advantage of the low rates on home loans. At the end of January, Americans applied for mortgage refinancing in the most active mode since March last year, although, according to the Mortgage Bankers’ Association, this pace has slowed.
At current rates, about 14.1 million homeowners are sitting on loans that they can refinance to cut their monthly spending by an average of $ 287, mortgage technology and data provider Black Knight recently reported.
You can use your savings to invest – perhaps with a popular app that will allow you to expand your portfolio. using only “small change”.
Still in doubt about the refi? You are well placed to do this if you currently have a 30-year mortgage at 3.9% or higher, and if your credit score is exceptional (800 or higher) or very good (740 to 799).
When Buffett says it’s time to borrow money, maybe it’s time for you reduce the cost of mortgages…