December 21, 2009 at 02:32 PM · Posted under Steve Bauman
If Paul Revere were alive today, he’d be shouting from his saddle (OK, maybe he’d Twitter from his Lazy Boy), “Higher interest rates are coming. Higher interest rates are coming.”
For much of 2009 the Federal Reserve has been buying mortgage-backed securities to the tune of more than $1 trillion. This aggressive buying program has helped keep mortgage interest rates hovering around 5 percent for 30-year money.
The Fed has set aside another $163 billion for purchases between now and the end of March. This pace of purchases is substantially less than earlier in the year. Once March 30, 2010 arrives, the buying by the Fed is scheduled to stop.
Everything I’ve been reading says to expect rates to start creeping up after the first of the year. Many experts are predicting 30-year mortgage rates of about 6 percent by April.
What does that mean to you as a home purchaser? Say you are buying a $300,000 home with 20 percent down. Monthly principal and interest at 4.875 percent on a 30 year mortgage is $1,270.10. That same loan at 6 percent will cost $1,438.92 per month.
Looking at it from a different angle, that $168 per month savings actually increases your buying power by almost $32,000.
So, the big question is, “what are you waiting for?”
Inventory of available homes is good and Uncle Sam is willing to chip in tax credits of $6,500 to $8,000. Housing prices are down but appear to be stabilizing and interest rates are incredibly low with most predicting an increase on the horizon. I’d say now is the time to buy that new home.
Posted by:
Steve Bauman
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November 16, 2009 at 09:54 AM · Posted under Lisa Rossetto-Glowacki
As a Realtor®, every year I receive this question from countless homeowners. Should I move or improve my house? What is my house worth? Is this a good time to sell my house and buy another? Gaze at your crystal ball of real estate and tell me what I should do! (Well, they don’t always come out and say this, but some do!)
If I could accurately predict the future of real estate, I’d be wealthy, as I could probably also predict the future of the stock market! Let’s consider a few important facts:
The government extended AND expanded the first-time home buyer’s tax credit. If you have not owned a house in 3 years, you could qualify for $8,000. If you have owned a home at least 5 of the last 8 years, you could qualify for $6,500. Income limits are $125,000/individual and $225,000/joint. The max purchase price is $800,000. The offer must be accepted by end of April, 2010 and must close within 60 days after that.
Interest rates are at historic lows! 5% or lower in many cases. They have been artificially held low due to the government purchasing bank mortgages and taking the risk from them. The government has indicated that they will not continue to purchase these mortgages after March, 2010. All indications are that after that, interest rates will rise sharply and dramatically over the 6% level.
Real estate inventories are plentiful and, in many cases, are priced at levels of 3-5 years ago. Many are in beautiful, move-in condition. Can you say bargains galore?
If you have a house to sell, as a seller, you can take advantage of buyers coming out of the woodwork to take advantage of this tax credit. There will be many more buyers this year than next year.
Put all of this together, and I think you’re looking right into a crystal ball that says, buy, buy, buy real estate now, now now!
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Lisa Rossetto
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