It may seem as though interest rates are in a constant state of flux. They go up, they go down, and with them may go your hopes and dreams of refinancing or remodeling your home. There are a times when outside factors help to drive rates downward – such as an upcoming presidential election. If you’re smart and pay close attention to the market, you should be able to recognize when rates are about to drop, allowing you to quickly capitalize on this with a new home, renovation, or remodel.
Why Take Advantage of Lower Interest Rates
There are several different ways that you can fund a home remodel or renovation. Some people will use savings, others will apply for grants, and some will put the money on credit cards to pay off over time. By far the most common way to pay for a home renovation, however, is with a loan.
Home improvement loans are generally given by banks for the purpose of remodeling your home. Building loans may also be available for the sole purpose of building a brand new home. Both assume that you will be gaining value in the property, which makes it worth the bank’s while to loan you the money; they are very likely to get the money back at the time of resale. At the same time, if you already have equity built up in the property, the bank can use this as collateral to fund your improvements, which in turn will build more equity as time goes by and the home’s value increases.
Obviously, no loan is ever foolproof, and the banks will want to be repaid. So during tougher economic times, they may raise their rates to maximize the amount of money they get out of the deal. This way, if you are unable to finish paying, they at least stood a better shot at being repaid.
During specific times of hopefulness and job growth, however, such as the optimistic time period just before a presidential election, many people begin spending more money in general. This, in turn, causes banks to relax a little, lowering their interest rates.
What this means for you, is that it will end up costing you less to remodel your home. This then means that any improvement in your home’s value turns into more equity, and more money in your pocket at the time of resale, rather than in the bank’s pocket.
While not everyone is ready to pull the trigger on a home renovation project at any given time, paying close attention to the interest rates at your bank can pay off in big dividends over time. If interest rates begin to drop, and you’ve been planning a remodel for a while now, it may be in your best interest to go ahead with the project now, rather than waiting another year. Due to the volatile nature of the market, you may not get the chance to remodel so cheaply again for quite some time.
Take the Plunge
With interest rates dropping, you may not find yourself in such a good position to remodel, renovate, or build a new home again any time soon. So why not go ahead with those home plans now, rather than waiting until later when it may cost you more?
If you’re ready to begin, sign up with BEYREP to get matched with a Pro who can help you navigate those tricky home improvement waters and help you come out ahead. Sign up today to get started, and begin creating the home of your dreams.