When interest rates are low, there are significant advantages for both buying and selling real estate.
A buyer has a double advantage from the low interest rate: monthly payments are lower and equity builds quicker even with the lower payment. During the first 5 years of a 30 year mortgage, equity builds nearly twice as fast for a 3% interest rate loan as for a 6% interest rate loan. The monthly payment for a $500,000 loan at 3% would be about $2,108 while for a loan at 6% it would be $2,998.
Buying real estate when interest rates are low is a great way to build your wealth!
A seller benefits by typically receiving a higher sales price for his house. Most buyers use a mortgage to pay for a significant portion of the purchase price. When interest rates are low, they can afford a higher purchase price. Competition drives prices upwards.
Depending on your goals, whether you are thinking of buying or selling real estate, now could be a great time to take action because of the low interest rates.