In May 2016, homeowners were struggling with a rare problem: mortgage rates were insanely low that it made more financial sense NOT to sell your home. Right now, selling your home and buying a new one would likely mean trading in your low rate for one that is much higher. This means higher monthly payments even for houses of equal value.
Typically, over the past few decades, mortgage rates have steadily dropped. This is what people are used to seeing in the U.S., and it has normally made selling your house an attractive option in order to reap the benefits of a lower interest rate on your next purchase.
You guessed it! The collapse of the U.S. housing market in 2008 caused lenders to steadily lower mortgage rates in an effort to jumpstart the market again. By November 2012, 30-year fixed-rate mortgages had reached an all-time low of 3.3%. To put this in perspective, this number averaged about 8% for the 20 years prior to the decline. With the current housing market showing signs of recovery, it is likely that rates will again eventually stabilize somewhere between 6% and 8%.
If you are considering moving into a new house that has about the same worth as your current one, it may make more sense to stay put and take advantage of your low mortgage rate. Unfortunately, that is not always possible. If you have to move, think about keeping your home and renting it out. The rent money you earn should be plenty to cover your current mortgage plus put a little extra in the bank to help cover the higher interest rate of your new home. Especially if home values in your area are on the rise, holding onto property and renting it out can be a very profitable investment.
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