Interest rates today are at or hovering near the lowest in decades. This is an annoyance for those who invest in money markets or savings bonds and who are seeing their investments pay almost nothing. However, the low interest rates are great news for many people and, if you know how to take advantage of them, you too can benefit from the record lows.
Taking Advantage of Today’s Low Interest Rates
Your ability to take advantage of today’s low interest rates is going to depend on your situation. You should never buy real estate or jump into any other investment just because of low interest rates. However, if your finances are in good shape, then you can benefit greatly from record low mortgage and interest rates. To take advantage of low rates:
- Refinance your mortgage. You’ll need to do the calculations to make sure that you will save enough to repay your closing costs (it might not be worth it, for example, if you plan to move very soon). However, as long as you make sure you’ll make back the money you spend on closing costs, now is the time to refinance. Talk to your current bank about what options you may have or consider exploring the option to refinance with another lender.
- Buy property. If you are in a position to do so (you have a down payment saved up and are planning on staying in one place for at least a few years), then now may be the time to buy a house. You’ll have much lower payments and you can lock in the low interest rates by choosing a 30-year mortgage with fixed rates and a fixed payment. You may also want to think about buying investment property if you can get a great deal (especially on a foreclosure or in depressed markets) and you can pay a low rate for the bargain priced home.
- Start a business. If you have been thinking about starting a business and you have a solid business plan in place, now may be the time to take out a loan. Remember, many new businesses fail so don’t jump into this casually- be sure you have a solid idea for how to make your business a success.
- Refinance bad debt. If you have credit cards and other high interest debt, it may be worthwhile to look into taking out a new personal loan to repay the old debt. You can save a lot of money if you pay off higher interest debt with a low-rate loan.
- Consolidate your student loans or consider taking some out to go back to school. Consolidating your student loans can lower your interest rate and allow you to lock in a low rate. Likewise, if you’ve been considering going back to school for a while and if you can get into a good program or good classes, now may be the time to take out a student loan since rates are so low.
In every case, these different choices for taking out a new low-interest loan can allow you to significantly benefit from low interest rates, as long as you are financially ready.