June 17th, 2014
Instead of trading up to new homes and listing their old ones, many homeowners are keeping their previous properties to put them on the rental market.
According to CNN Money, low interest rates of previous years have encouraged these homeowners to become landlords. With affordable mortgage payments on their old homes, they can charge an inflated rent price of a few hundred dollars more than those expenses plus the property taxes. In the end, they stand to net a lot of extra revenue each month to cover second mortgages.
Indeed, rates were drastically lower in the beginning of the housing recovery compared to what’s been seen in the first half of 2014. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage was 3.35 percent in the last week of 2012. For the week ending June 5 of this year, the average sat at 4.14 percent. While interest is higher, it still hasn’t hit the 5 percent mark, which is good news for homeowners like Chris Cannon of Mount Lebanon, Pennsylvania.
“It would be incredibly hard to give up the 3 percent mortgage we have,” he told the source.