Real Estate Information Archive

As we begin to see some signs of economic recovery, many of us are looking to use lessons learned from the recession to make wiser financial decisions.  If you are a potential home buyer, you may be considering the opposing forces of declining home values and rising interest rates.  How does each affect your bottom line?

Interest Rates

Interest rates have been hovering near 5% for most of 2009 (see the middle, right side of my home page for a historical mortgage rate chart) and have been rising slightly over the past few weeks.  Though a few percentage points may not seem like much, the graph to below shows that an increase in just one or two points can diminish your purchasing power by $100,000 or more. In addition, the cost of borrowing money is on the rise.  A homeowner with a $350,000 loan will pay $7,000 more in interest if rates rise from 5% to 7%.  Click here for more information and examples.

Lower Home Prices

Most real estate markets around the U.S. started seeing price corrections (that means lower home prices) in late 2007.  Today, we are seeing greater affordability in almost every region.  Many regions that saw declines first are already seeing stabilization, which means home values in the lower price ranges could be on the rise within the year.  Even if we see further declines, lower home valuations don’t hurt us as much as high interest rates do.

A Long-Term Investment

When it comes to wise investment choices, real estate is hard to beat.  A recent study by NAR, the National Association of REALTORS®, found that in ten years, a $10,000 investment in the stock market would be worth $23,600 in a normal market and $35,200 in a bull market.  That same investment in real estate would be worth $110,300!!

Whether you’re a first-time buyer or a current homeowner thinking of moving up, it’s important to weigh the factors: will waiting for the bottom of the real estate market truly save you money?  If interest rates rise - which seems inevitable - how much more will you pay for your home?

How the Loan Rates Affect Us

Banks are still loaning money and the interest rates are still low!  Currently, interest rates are staying in the low 4% range for a conforming loan ($417,000 or less).  Just a few months ago the same loans would have been 6% or even more!  Higher priced loans, known as Jumbo Loans (more than $417,000), also have a low interest rate in the low 5% range.  Would you like to see how that translates into a monthly payment? 

* Principle and Interest.

These payment numbers are approximate and for owner-occupied properties.  Investment property interest rates may differ.

With all the talk of low interest rates and attractive mortgage programs, you might be wondering if it’s a good time to refinance. Ask yourself these questions:

□ Do you have an adjustable rate

       mortgage that is due to reset soon?

□ Do you pay mortgage insurance?

□ Is your current mortgage interest rate at

       least three-quarters of  a percentage

       point higher than today’s rates?

□ Do you have other debt you’d like to

       consolidate, such as credit cards,

       student loans, or auto loans?

□ Will you be staying in your home for the

       next year or more?

If you answered “yes” to any of these questions, call me today to go over your options.  I can help answer your questions and put you in touch with one of the trusted lender I work with.

I came across a blog from Ki Gray, a real estate agent in Texas.  He dedicated several weekends to creating this great tool that shows the current mortgage interest rates.  This is updated regularly as the rates change, so please check back often.  Thanks Ki, for creating this useful tool and sharing it with me!

Mortgage Interest Rates Historical Mortgage Rates