One of the biggest questions I am getting these days is about where interest rates are headed. Though there is no way we can tell from day to day there is a consensus that interest rates will rise over the course of the year. The Federal Reserve has stopped purchasing toxic mortgage assets as of the end of March 2010 and there was a bit of a rise for several days. However, the rate has come back down to the 5% range, which is very good.
What we don’t know is when rates will start increasing or how far they will go before they settle. We do know that rates are far more likely to go up this year then down and a good economy normally has a rate that averages between 7 and 8%. I’m sure while we all would love to see the economy improve, know one likes the idea of rates being in the 7 and 8’s again. However, at some point in the future, they will go up. The question is; will you be able to take advantage of the still historically low rates before they increase? If you are ready, let me know. I will be more than happy to introduce you to a good lender who can help you get qualified.
Right now is the time to buy if you would like to qualify for the first time homebuyer’s tax credit or the move up/move down tax credit. You will need to have a house under contract by the end of April to qualify. The only exception to this date is for military personnel coming back from Iraq and Afghanistan.
The other reason it’s a good time to buy is interest rates. They are still historically low right now, though it has been predicted that they will be rising throughout the year into the 6’s. With that in mind, interest rates in the 6’s are not bad when you look at where rates have been over time.
The last reason to buy is the homes that are currently on the market. There are a great many homes to choose from and some are at great prices due to short sales and foreclosures. It can take more time to get a contract in place for these homes so it is important to start soon if this is the type of home you are looking for.
In reading over many recent publications it looks like the interest rates will be at their lowest during the first quarter of 2010. The Federal Reserve along with additional government programs that have helped keep interest rates low will be phased out over the next three months in hope that the private markets will come in and take over where they left off and this is what needs to happen to insure growth in the economy.
However, it is expected to be a bit bumpy since no one knows how much or exactly when the private markets will jump in and take up the slack. That means that interest rates may be (some say will be) rising throughout the remainder of 2010. Of course, since there are so many unknowns, no one can say for sure what will happen exactly. A few predict that the government will have to get involved again before it can totally let the markets go and we will all have to wait and see as the year progresses. The one thing everyone seems to agree on it that for those in the market to purchase a home; interest rates will be at their best in the next few months.
The Federal Reserve has met for the two days earlier this week in order to discuss the next move in regard to interest rates as well as whether to maintain some of the aggressive programs that were put in place this past year to fight back the devastating consequences of the failing economy. They did announce on Wednesday, August 12, 2009 that it will keep short-term interest rates at a record low in order to further stabilize the U.S. economy. Though this may seem to be a bad sign, the Fed also signaled confidence in the recovery, saying economic activity is “leveling out.”
This is just another step toward our economy coming back around though everyone does expect the progress to be slow. If you go back to other economic times you will note that unemployment is one of the last areas that rebound so we may be seeing that number rise even more before it finds its tipping point and dips into acceptable levels once more. This is much better news than we were getting six months ago and there will be challenges ahead but as a nation we are going in the right direction.
I wish I was talking about a cruise down the river or to the Caribbean, but I am not. I am talking about buying your first home before rates go back up to the 7 and 8 percent levels. That’s right, historical rates will not stay down forever and, fact is, they have already started to move upward at a pretty fast pace over the last two weeks.
Many people seem to believe that these rates will just stay this low until all the homes are sold and that’s just not true. Rates are based on many factors that are far more than I ever want to get into and all I know is they are going up and no one I am talking to right now thinks they are going to come back down.
If you want to get the first time tax credit up to $8,000, buy a new home and get the best rate possible, the time to look is now. There are still many great homes on the market and prices have come down over the past year. That simply means if you are in the market to own a home you can still take advantage of good rates, good prices and a tax credit if this is your first home. It doesn’t get any better than this!
If you know me you know that I have been around a while. If you don’t know me yet you’ll just have to take my word for it! In all that time I have seen interest rates go up into the teens and plummet to about the same place we are right now for a thirty year fixed mortgage. Four and a half is about as good as it gets for a fixed thirty year mortgage and as we have all become very aware, a thirty year fixed is where you want to be.
Place on top of that the tax credit for up to $8,000 for a first time home owner this year and you have the perfect time to buy a home if is the right time for you. By that I mean you have to be ready for a home and to qualify for a home. I would be more than happy to give you someone you can talk to so you can find out if you qualify. Once you know you qualify, and then we can start looking for a wonderful place for you to call home.
You can add to that the availability of properties to look at and the willingness of sellers to deal and you have just about the most favorable climate to buy that I have ever witnessed! If you have any questions about interest rates, the tax credit, properties or anything else about home ownership, please don’t hesitate to call me. I would love to help you!
With all the financial news and goings on, it is good to know that interest rates for mortgages are still good right now. They seem to go up a little and then down a little and stay somewhere between the high 4’s to low 5’s. That’s not to say that rates won’t go higher or lower since no one is ever able to predict exactly what will happen. All we have are the trends so that’s all we can look at to see if rates are staying relatively healthy for buyers. Today’s interest rate trends definitely are good for buyers. However, there are some other things to consider in today’s market.
The cost of the loan is something that you will need to consider as well as the overall housing market in your area. Working with a good mortgage loan officer and a real estate professional should help you make good decisions, if you are in a place to purchase a home. Even though rates are low, you will need to have at least 3.5% to put down on the home as well as up to 3% closing costs money if the seller is not able to negotiate paying some closing costs. Be prepared and you will come out ahead of the game!
As my mortgage person tells me, “timing interest rates is no more affective than timing the stock market”. I guess it’s true because I have heard several people lately say things like; “I’ll buy a home once the rates bottom out” and “I won’t refinance until I can get the lowest interest rate possible”. The trouble with this type of thinking is that the interest rate may have bottomed out or not! Know one knows when interest rates are going up or down.
Another misconception has the interest rates for mortgages either tied to the bank rates (rate for money borrowed from the Fed or from bank to bank) or prime and mortgage rates are not calculated on either of these factors except for HELOC loans (Home Equity Line of Credit). There are a lot of things that go into how rates are calculated and I have been told it is not unusual for rates to shift and change several times a day. So I agree with my mortgage people that whenever you have money to put down (3.5% or better), a stable employment history, a good income and good credit history; it’s a good time to buy for you. Yes, get the best rate and cost at the time but don’t try to time the market. You may just miss a great opportunity by waiting too long!
Though Tennessee Housing Development Agency (THDA) has been around for 35 years, it amazes me how many people do not know about the wonderful loans they provide to first time home buyers in the State of Tennessee. These first time programs continue to be THDA’s main focus even though they have recently developed programs for renters and home owners who currently hold adjustable rate mortgages that they are struggling to pay.
THDA provides those first time home owners who qualify, with fixed rate, 30 year mortgage with manageable interest rates. Each program is slightly different and I am going to be blogging over the next week or so and breaking each one of the programs down into digestible bites in order that we all understand how they work and what is required by each loan program.
The past week or so we have been hearing about the dropping Dow Jones Industrials and the rising oil prices. While these are definitely things to be concerned about, there was some good news that no one heard about; existing home sales edged up in May.
The National Association of Realtor’s reported in late June for the second time in the last 10 months existing home sales were up. This coupled with the Federal Reserve’s decision to leave interest rates unchanged is very good news on the real estate front.
Though this news was overshadowed by the Dow and oil prices, it is important to know and hear that there is good news on the economic front as well. With many housing choices on the market and interest rates that continue to stay down many people are realizing that it is indeed a good time to buy a home.
