Where are Mortgage Rates Headed in 2020?

Loan

It seems that the question on almost all homebuyers’ minds is- Is now the right time to buy? The right time to buy a home in Washington, Oregon, Idaho, or Colorado is different for each homebuyer; however where mortgage rates and home prices are can present more opportune times than others to buy a home. Rates have reached a historic place in 2019, where could they be headed in 2020 and what does that mean for the next wave of homebuyers? Read on to learn more.

Where were rates in 2019?

Rates have been at a very interesting place in 2019. By the fall of 2019, experts had estimated that mortgage rates would be in the 5 percent. However, mortgage rates were actually more than a whole percentage point lower in the 3 percent. Real estate professionals feel confident that rates will stay low for the rest of 2019

A couple factors played a role in the unexpected outcome. President Trump had been putting pressure on the Fed to keep rates low. In August the Fed lowered rates, this is the first time in over a decade that the Fed has reduced rates. Amazingly enough, the Fed lowered rates again in September by a quarter of a percentage point. Trade wars can also cause rates to lower. The trade wars between the U.S. and China, two countries with the strongest economies in the world, can decelerate economies and lower rates. 

Last but not least, you’ve probably heard something about a yield curve. A yield curve is a curve on a graph that is a good predictor of economic behavior. Currently the 2-year/10-year yield curve is inverted, which is an indicator of a recession and consequently means low rates and low rates to come. 

Where will rates go in 2020?

It’s difficult to know where exactly the market will go, however, rates are estimated to remain low for 2020. Even if rates do rise, rates will still be at historic lows. 

What do low rates mean for homebuyers in Washington, Oregon, Idaho, and Colorado?

If you’ve been considering purchasing a home in Washington, Oregon, Idaho, and Colorado, the remainder of 2019 or 2020 may be a favorable time to buy. Your mortgage interest rate is a fee for borrowing money from a lender. Your interest rate is a percentage of the amount that you are borrowing to finance your home and is paid to your lender monthly throughout the life of the loan. The amount that you are paying in interest can quickly add up, but with rates as low as they are you could be keeping hundreds of dollars in your pocket each month. 

If you’re already a homeowner in Washington, Oregon, Idaho, or Colorado you may be able to cash in on these low rates as well by refinancing your current home loan. Refinancing not only could help you get a lower rate, but it could also eliminate mortgage insurance if you’re paying it, decrease the term of the loan, or lower your monthly mortgage payment, which could save you even more money each month.

In 2018 a lot of potential homebuyers were on the fence about whether it was a good time to buy. Now many people are taking advantage of these low rates and making the leap to homeownership. Although there could be repercussions from such low rates. Typically, low rates have come with a rise in home prices. Therefore, if you have been considering purchasing a home of your own, now or early 2020 would be favorable to buy.

Summary- Mortgage interest rates entered new territory in 2019 by being over one percentage point lower than what experts had predicted and are forecasted to remain low for the rest of 2019. In 2020 rates are projected to continue to remain low. For homebuyers or homeowners looking to refinance, 2020 could be the right time to buy in Washington, Oregon, Idaho, or Colorado and save hundreds on your monthly mortgage payment. 

The Pros & Cons of Renting Alone vs. Renting with Roommates

renting

The great thing about being a renter is the flexibility of your living arrangements. From space to budget and amenities, renting an apartment is a good fit for different people at different times. Depending on your situation—as well as your personality—another very important question to ask yourself is “Should I rent alone or find a roommate?” 

As with most things, there are pros and cons to either option, so there is not one correct answer. Evaluate your situation, think about what type of person you are, and then decide if roommates or solitude are your best fit. 

Renting Alone

If you decide to rent your own place, you’ll have a lot of freedom. You can personalize every room the way you want to, without having to worry about the preferences of anyone else, other than the landlord. You also don’t have to think about abiding to someone else’s schedule; so, any time you feel like singing or watching TV or blending some fruits, you can make all the noise you want.

Privacy is guaranteed, and it weighs a great deal if you’re someone who needs their space. However, if you like having people around and you’re not used to being on your own, it might be difficult to deal with all the alone time.

Renting alone also comes with a lot of responsibility, meaning you’ll have to clean and maintain the apartment yourself, pay the bills on time, and manage the costs of groceries and other expenses on your own. It also might be more expensive to rent alone, even if you’re renting a smaller apartment. But, if you take control of your finances, you can end up saving money. 

Renting with Roommates 

Co-living is trending right now, and for a good reason. More people means more money to spend, which automatically means more space, even if it is shared. Privacy will be sparse, so if you value your alone time, think about the implications of almost always having people in your home. Depending on how much you’re all willing to compromise, you can get an apartment that is much larger than the one you could get on your own. 

Sharing a place means you will also share the cost of utilities—and maybe even groceries—with your roommates, cutting down on expenses. This is especially helpful with subscription-based services such as internet, cable, or Netflix, where you’d have to pay the same amount even when living alone. Cooking together and splitting the cost of food will also lead to some serious savings if you manage your finances properly

Besides splitting bills, you’ll also be splitting chores. This can be a friction point, so it’s best to set some ground rules and create a schedule to which you all agree. If you do so, some of the painful cleaning and decluttering can actually become fun. 

But remember that roommates can be wildcards – you never know what you’re going to get. If you don’t have any friends or acquaintances who want to join you in sharing a rental, be sure to turn to a trustworthy source to avoid scams. Do your research, ask a lot of questions, and make sure you find a roommate you’re compatible with

Whether you choose to rent alone or with someone else, there are many ways you can save money as a renter. Adopt a frugal lifestyle focused on minimal expenses and follow the golden rule of 50-30-20: 50% of income goes to needs, 30% to wants, and 20% to savings. It may seem complicated at first, but with dedication and experience, you’ll be saving money in no time. 
About the author: Mihaela is a passionate reader and writer, with an affinity for language and linguistics, as well as the latest technological developments. She discovered her passion for real estate at RENTCafé, and you can read more of her articles on their blog.