How to borrow money at today’s low rates

If you want to buy a home, refinance your mortgage, or buy a car, record interest rates may convince you that the world of borrowing is your oyster. But this oyster is more and more difficult to break.

The average interest rate on a 30-year fixed-rate mortgage, for example, hovered around 3% for weeks, a startling development for anyone who remembers the double-digit rates of the 1980s and early 1970s. 1990s. Not surprisingly, many people are keen to take advantage of low rates to buy a home or refinance an existing mortgage.

But even if you have a stable job, taking advantage of these great rates can prove to be more difficult than you expected. The severe economic recession and the continued uncertainty brought about by the coronavirus pandemic have made lenders extremely cautious, says Matthew Speakman, economist at real estate firm Zillow. “Borrowers are scrutinized until the deal is concluded,” he said. Additionally, the high demand for loans means lenders can afford to be specific, Speakman explains. “Even with these strict lending standards, there are enough interested buyers to keep the housing market active,” he says.

That doesn’t mean you have to give up on your quest for your dream home. Likewise, refinancing a mortgage could save you a lot of money if your current rate is at least a percentage point higher than the new rate, or even less in some cases. But be prepared to demonstrate that you are a good credit risk. With the economic outlook cloudy at best, lenders want assurance that you have the long-term means to pay off the loan. Plan to provide plenty of documentation, especially if you are self-employed. And make sure your credit history is in good shape before you start applying for a loan (see Boost Your Credit).

Home inventory is low, so if you are looking for a home, keep in mind that you might be in competition with many other buyers. To improve your chances, “make your offer as clear as possible,” says Glenn Brunker, Mortgage Manager at Ally Bank. Make sure you are pre-approved before you bid. If you can afford it, a large down payment will also help, he says. If a seller has an offer from a buyer who wants to put 5% off and an offer from a buyer who can put 25% off, the seller will choose the latter “because it appears to be from a stronger buyer. “he said.

Time for a new car? The average interest rate for a 60-month new car loan is 4.25%, according to Bankrate.com, but many dealerships offer rates as low as 0.9% or even 0% on some models. Again, you usually need great credit to qualify, but standards vary by dealer, says Ivan Drury, senior manager, Insights, for Edmunds.com, a consumer-oriented website.

It’s usually a good idea to check with your bank or credit union first to see what type of auto loan rate they offer. But in this economic environment, auto dealers are eager to move inventory and may offer a better financing deal, Drury says.

Credit cards are more difficult to obtain. Even if you don’t plan on buying a house or a car, you might be interested in applying for a new credit card. But here too, credit standards have tightened. The number of new cards opened by customers fell 65% between mid-April and mid-May compared to the same period a year earlier, and the average credit limit fell 35%, according to CompareCards. com. “I don’t expect it to be any easier to get a card anytime soon,” says Matt Schulz, chief industry analyst for CompareCards. You’ll likely need a credit score of at least 700 (and in some cases 720-740) and a stable income to qualify.

Credit card rates have come down along with other consumer rates, but the average rate stands at 15.78%, according to the Federal Reserve. And 0% balance transfer deals, which provide a way to manage high-interest debt, are much harder to find, says Ted Rossman, industry analyst for CreditCards.com. American Express, for example, has removed all balance transfer offers for the time being. To get the Hunting slate card, which has a 0% rate for 15 months (then 14.99% to 23.75%) and no transfer fees on balance transfers made within 60 days of opening the account, you can currently only not apply online – you must go to a branch chase.

Still, if you have good credit, you may be able to get a 0% introductory offer on purchases or balance transfers. The window of no interest to the US Bank Visa Platinum the card runs for 20 months (after that you will pay 13.99% to 23.99% on unpaid balances), and the balance transfer fee is 3% of the transfer amount.

To increase the chances of your card application being approved, consider applying to a financial institution with which you already have a bank account, credit card, mortgage, or other relationship. are a good customer. You may also get lucky with a local bank or credit union.


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