Sometimes all the political noise about a US default is easy to tune out. But have you ever stopped to wonder how it might impact you as a duplex buyer?
One of the fears economists have about a default is the impact it would have on interest rates. As the U.S. is already projected to spend $1.5 trillion more than it takes in, our nation would be forced to borrow money to cover the deficit at higher interest rates than before.
It’s kind of like missing a credit card payment and seeing an interest rate of 21 percent on your next statement.
Sooner rather than later, this would trickle down to consumers in the form of higher interest rates on things like credit cards, car loans and duplex mortgages.
If you don’t think it will have an impact, consider this. With an increase of just 1 percent interest on a $200,000 loan, the annual payment would jump $2000, or almost $200 a month.
That’s enough to keep some duplexes from cash flowing.
If you’re in the market for a duplex right now, there is one way to lock up a low interest rate, regardless of what happens with the federal budget on August 2. How? Get a purchase agreement.
The minute you have a signed purchase agreement, you can lock an interest rate. That is, if that purchase agreement is signed before the ceiling for the deficit is raised.
Think about it.
It could make all the difference in your cash flow.