Buying a property with plans to refinance can be a good plan even if interest rates are high. Here are three reasons why:
Locking in the Property: High-interest rates may mean higher initial mortgage payments, but they also tend to depress property prices. By purchasing a property during a period of high-interest rates, you may be able to negotiate a lower purchase price since fewer buyers may be in the market. This can result in a better deal on the property itself. Once you’ve locked in the property, you can then wait for interest rates to drop or for your financial situation to improve before refinancing.
Improving Creditworthiness: Buying a property and making timely mortgage payments can improve your creditworthiness over time. This can put you in a better position to negotiate favorable terms when you refinance, such as lower interest rates or better loan terms. Even if interest rates are initially high, improving your credit score can help you qualify for a lower rate when you refinance in the future.
Capitalizing on Future Rate Drops: Interest rates fluctuate over time due to various economic factors. While rates may be high when you initially purchase the property, they could potentially drop in the future. By buying with plans to refinance, you can take advantage of future rate drops to secure a lower interest rate on your mortgage. This can result in lower monthly payments and potentially save you money over the life of the loan.
Overall, buying a property with plans to refinance can be a good plan even if interest rates are high. By locking in the property, improving your creditworthiness, and capitalizing on future rate drops, you may be able to secure more favorable terms on your mortgage in the long run.