What Does a Recession Mean for You?
There’s lots of talk right now about a recession coming in the next couple of years. What are some of the indicators, and more importantly, what would it mean for you and your mortgage and real estate needs?
One of the most reliable recession indicators is the unemployment rate. Believe it or not, recessions occur when the unemployment rate reaches its lowest point and then turns higher. And with the unemployment rate at such a low level, it’s likely close to bottoming out.
But what if we do see a recession? Historically, interest rates have declined pretty dramatically, giving us a great opportunity to refinance. So as a strategy, if we’re taking out a mortgage today, we don’t want to load it up with a lot of fees that would take a long time to recover, or a lot of points, because even though the rate starts lower, it takes a long time to recover the points that you pay.
In addition to that, as far as real estate values go, believe it or not, because interest rates decline during recessions, real estate values have hung in there pretty good and many times they’ve gone up. Even the last recession, which had the housing bubble, saw real estate prices relatively stable during the recession.