Low interest rates offering great opportunities in 2009

Low interest rates offering great opportunities in 2009

This has been an interesting year, to say the least. The nation's financial markets have been turbulent and it seems uncertainty is everywhere. However, one of the bright spots has been interest rates. Of course there have been some peaks and valleys, but generally speaking rates, both short and long term, have been very low all year long.

As a mortgage professional I am excited about some of the opportunities these sustained low rates have been able to provide. In the past, rates have dipped quickly and the benefits have been reserved for a few select homeowners who monitored rates and put themselves in a position to act quickly. In 2009, many more people have been able to take advantage of them. There have been baby boomers just a few years away from retirement who have been able to purchase their retirement home early, at a discount.

There have been young people who could afford to purchase a home for the first time and take advantage of the income tax credit. There have been parents who have been able to refinance their current homes to finance college educations for their children, and do it with rates under 5 percent that will be fixed for the next 30 years. These are some of the things that make working in the mortgage industry satisfying for me. Financial planners help people manage their investments, mortgage professionals help people manage debt.

All right, I know there are more than a few cynics out there and I know what they are thinking -- that these interest rates are the result of excessive government spending and that there will be a price to pay in the future. I would have to say I agree with this statement, but I do not necessarily think this will be the end of the world.

We all know everything comes with a price, and I think it is very reasonable to assume that the price for 2009's low interest rates will be some inflation and higher rates in the years to come. However, this will only be bad for those who fail to plan for higher rates going forward.

Common sense should help guide today's debt management decisions.

For example, if you have an adjustable rate mortgage that is set to adjust in the next three to seven years I would expect you to have a plan for paying down the principal so that you are not exposing yourself to too much interest rate risk when the payments start to adjust.

Also, if you expect to have a major expense in the next few years it would be a good idea to explore your options for borrowing the money in today's environment rather than hoping for the best in a few years. Finally, if you are considering purchasing a home, todays low interest rates coupled with the tax credit and discounted properties, make now a great time to buy.

As great as it has been to see interest rates like we are currently enjoying we all know they can not last forever. I would encourage you to take a few minutes to review your current debt and try to forecast any future debt you expect to incur.

During this review ask yourself how long your payments are fixed for and when you plan to pay off the debt. Simply asking yourself these questions will get you started in the debt planning process. Depending on you situation the next step could be to consult with a mortgage professional to review your available options.

As always, if you have any questions please consult with a member of the Mortgage Lenders Association of Greater Hilton Head Island.

Ric Spiehs is currently vice president of the Mortgage Lenders Association of Greater Hilton Head and a mortgage loan officer with SunTrust Mortgage.