The Time is Right: Take Advantage of Low Interest Rates and Buy that Home
Posted by Russ Schreier | Leave A Comment »
By Russ Schreier and Alex Manessis, Samuel Scott Financial Group
Everyone across the globe has had serious questions about the direction the economy is headed over the past 4 years. Many of the questions that first arose in 2007 and 2008 are still unanswered today. What is going to happen to the banks? Are my investments safe? What happened to Wall Street? Despite all this uncertainty, this might be the best time to buy a home in decades. Interest rates are extremely low, and the advantages of buying now outweigh the advantages of holding out for the lowest possible purchase price.
Interest Rates are at historic lows. Since 1972 the average rate on a home loan was 9%. Today if you were to obtain a loan from Freddie Mac for $500,000 you could get an interest rate of 4.5%. That is half average rate over the last four decades. (Don’t believe it? Take a look for yourself). That is worth repeating. HALF! What does this mean for the potential home buyer? Well to start, it will save the buyer a substantial amount of money on interest during the life of the loan. That current $500,000 loan from Freddie Mac would have a monthly payment of $2,533.43. If you were to obtain that same $500,000 loan at the average of 9% how much more would you spend a month? The monthly payment would be $4,023.11 or $1489.68 more than at today’s interest rate. Over the course of the loan one would save $536,284.80 in interest payments.
The counter argument to this is what if housing prices drop another ten percent? Well that home you intended to buy will drop in price by $62,500. That little “if” suddenly has become a big “IF”. Is it worth waiting on housing to prices to drop, which may or may not ever happen to save $62,500 when you could save over half a million dollars in interest? The simple answer is that although waiting could save you a small chunk of money in the present, you risk interest rates rising to what have been historical levels, causing you to pay out on a lot more money on interest over the course of the loan.
There are people out there willing to loan you money at low interest rates, even in these times of uncertain economic future. Take advantage of this and go out and purchase that dream home. Interest rates have never been more accommodating to buyers and likely have no where to go but up. Remember home loans are a long term agreement; would you rather save some money now upfront? Or a whole lot more money over the next 30 years? Make the best out of the current financial market, take advantage of the deals that come your way. You do not want to look back at 2011 fifteen or twenty years from now and say “I should have bought my home when interest rates were low,” every time you write that mortgage check out each month.
Related Posts: Mortgage News, San Diego
The Interest Rate Impact…It’s Bigger Than You Think!
Posted by Lisa Herndon | Leave A Comment »
Why is now a good time to buy a home? The answer may not be exactly what you think! Sure, home prices are down, making that home you had your eye on a few years ago much more affordable. Even more significant though is the drop in interest rates. For months we’ve heard reports that interest rates are “nearing all time lows” but last week, interest rates hit their all time low at a little over 3.75%.
A lot of people I meet and clients I’m working with to help buy a home ask me, “shouldn’t we wait to see if home prices continue to drop?” I also hear, “I’ve heard that we may be in for another housing price dip…shouldn’t we wait?” My answer: If you want to pay more for your home, wait to see what happens with home prices! Now this might be opposite of what you expected and it does not mean that I think home prices are going to begin rising dramatically. It means that home buyers should take advantage of the low interest rates while they last. They are MORE significant than the price of the home.
Do you know that a $600,000 home will cost you approximately $130,000 more over the life of the loan for every point of interest? For example, the difference between a 4.25% interest and 5.25% interest rate (both of which are fantastic) will cost you approximately $130,000 amortized! Sure, we may see home prices go down a bit more, but why risk $130,000 while you wait for the price to drop $10,000 or $20,000? To break it down further, the same $600,000 home will cost you approximately $362 per month more for every 1% increase in interest rate. Compare this to the approximate $100 per month savings for every $20,000 in home price reduction. Bottom line: If you are waiting for that $600,000 home to drop to $580,000 to save $100 per month, if interest rates rise, you will be paying much more for your home, not less! Interest rates are sure to begin rising again at some point. The average interest rate historically is 9%. We’ve hit the “all time low” already and rates are still great! Take advantage of it!
Lisa Herndon is a licensed Realtor proudly serving the San Diego, CA area. Please visit www.SanDiegoGreatHomes.com for more information and to learn about working with Lisa to help buy or sell your home!
Financial information provided by Mark Robertson with Samuel Scott Financial. For more information about Samuel Scott Financial, visit http://samuelscottfg.com/mark.htm
Related Posts: Agent Services, Area Statistics, Buyers, Financial news, Great Real Estate Deals, Home Loans, Industry Updates, Interest Rates, Market Trends, Mortgage News, San Diego
Countywide Mortgage Update – Higher Mortgage Rates and Lower Loan Amounts Coming Soon?
Posted by Paul Gonzales | Leave A Comment »
HEADS UP! The cost of real estate financing may be going up, and the size of cheaper loans may be going down – all very shortly! Since I last reported on this in April, the Federal government has done nothing to change either of these two prospects.
Higher Rates
On June 30th the Federal Reserve is scheduled to end its subsidy of interest rates including mortgages, by terminating its purchase of U.S. Treasuries. While arguments abound about whether this program, known as “Quantitative Easing” or “QE2” has helped or hurt the economy, many analysts are concerned that the ending of this program could put upward pressure on interest rates, particularly mortgage loans.
More Costly Loans
The current “jumbo” or high-balance loan limits for both conventional (Fannie Mae and Freddie Mac) and FHA loans are scheduled to be rolled-back to considerably lower loan amounts on October 1st. The Obama Administration has signaled that it does not intend to press Congress to extend the current (higher) loan amounts beyond that date. This may not be an issue in the Midwest but could impact real estate markets such as Southern California. In San Diego County that will likely mean the maximum conventional and FHA loan limits could drop from $697,500 to below $600,000 depending on what formula HUD uses to compute the new lower limits. Loan amounts above the new limits will fall into the more expensive, higher interest rate and tighter underwriting rules for true jumbo loans.
Home Buyer or Home Seller?
For either party with an interest in real estate today, these two events should prompt urgency in buying or selling that home. Whether you are shopping for or looking to sell that home, you may be well served by being proactive and getting ‘er done. Contact your Real Living Lifestyles agent today, get the facts and get moving now!
For more information – Paul Gonzales, Countywide Mortgage Lending (760) 746-7388 paulforloans@aol.com, CA-DOC290493
Related Posts: Area Information, Buyers, Coastal Living, CW Mortgage, Escondido, Home Loans, homes for sale, Interest Rates, Investment Properties, Lifestyle, Mortgage News, Real Estate News, Real Living, Real Living Lifestyles, San Diego
Countywide Mortgage Update – Home Buyers and Sellers: Two Important Events That Will Affect You Very Soon
Posted by Paul Gonzales | Leave A Comment »
If you are planning to either purchase or sell a property this year, there are two scheduled events coming up rapidly that may have a significant impact on you:
Higher Interest Rates?
On July 1st the Federal Reserve will complete its $600 Billion dollar purchases of US Treasury Bonds. Many analysts believe that with the Fed pulling out of the Treasury market, demand for such bonds will lessen, causing interest rates including mortgages to rise.
More Expensive Loans?
On October 1st the current conforming “jumbo” loan limit in San Diego County is scheduled to be reduced from $697,500 to $625,500 (or lower). For home buyers looking to purchase a home in the approximate price range of $500,000 to $900,000, this will push them into the limited, “true” jumbo loan category. Such jumbo rates and prices are significantly higher than current conforming rates.
What This Means
While no one knows what, if anything, the Federal government may do about these two scheduled events, the impacts are quite clear:
- For home buyers higher rates will mean higher payments and reduced buying power. For those buyers in the $500-$900,000 price range these effects will be magnified by the lack of conforming jumbo loans resulting in even higher rates and costs to obtain financing.
- For home sellers these two events will reduce the number of available buyers, especially in the price range noted above.
** THE MESSAGE IS CLEAR ** The next several months may prove to be the absolute best time this year (and beyond) to buy or sell that home. Contact your Real Living Lifestyles real estate agent today, get the facts and get moving now!
for more information – Paul Gonzales, Countywide Mortgage Lending (760) 746-7388 paulforloans@aol.com, CA-DOC290493
Related Posts: Area Information, CW Mortgage, Escondido, Financial news, Home Loans, homes for sale, Interest Rates, New Homes, Real Estate News, San Diego
Open House – Saturday Sept. 25th 2-4:30, Detached 4 bedroom/3 bath Home in Rancho Bernardo…
Posted by Patty Moore-Davidson | Leave A Comment »
Don’t delay. See it today! Feel at home in this Westwood Valley single family home built in 1991, located near Poway Unified schools, parks, community club, hiking trails and Lake Hodges.
Do you like to cook and chat? Then you will love the spacious kitchen and adjoining family and dining rooms. Also, the low maintenance entrance courtyard and backyard are perfect for outdoor dining and relaxing. And, you must see the huge master with walk-in closet and view balcony. Did I mention the loft? You will love the amazingly big views, windows galore, vaulted ceilings and a flowing floor plan.
All it takes is you to make this house a home.
Regular sale at the bargain price of $550,000-$570,000
Low HOA fees!!! Get in for as little as 3.5% down!!!
Want to hear more?
Call/text Patty Moore-Davidson today at 858-613-9484 or go to www.pattymd.com
To see home or for more information Call/Text 858-613-9484, or search the full MLS at www.pattymd.com
Related Posts: Buyers, Find A Home, Great Real Estate Deals, Poway, poway real estate, Rancho Bernardo, San Diego
