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The Ups and Downs of Mortgage Rates

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For the past few years, mortgage rates have reached – and remained at – historic lows. Between the low rates and federal stimulus incentives, millions of first-time buyers became homeowners and existing homeowners moved up.

That was then. What’s going on now? Like the stock market, it depends when you check.

The good news is that 30-year fixed-rate loans are still very low: 4.1 percent, according to USA Today on Thursday, Oct. 31. Yes, it’s a little higher than last year, but still a bargain compared to, for example, the 6.4 percent Freddie Mac reported in October 2008.

The more sobering news is that rates for 30-year, fixed-rate loans are expected to rise in 2014. The Mortgage Bankers Association predicts 5 percent next year, and 5.3 percent by early 2015. None of this should come as a surprise, and buyers should keep the prospective hike in, well, perspective.

Rising interest rates are a sign of a strengthening economy. You’d be buying a house in a more economically stable environment, which is good news. The expected rise is slow and measured, and rates will remain a relative bargain.

The best person to talk to about ramifications of rising mortgage rates is your local RE/MAX agent. He or she can tell you about lending conditions for your area, and how interest rate fluctuations may affect your options.

Short Sale: Avoid Foreclosure

There may be another option to save you and your home from foreclosure. Short sales allow you to avoid foreclosure and salvage your credit. Contact a knowledgeable RE/MAX agent to find out more.

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Put it on the calendar and book your trip today to the 2013 RE/MAX R4 and RE/MAX 40th Anniversary Celebration, Feb. 25-28, at the MGM Grand Hotel & Casino in Las Vegas, NV.

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RE/MAX CEO, Margaret Kelly, discusses how RE/MAX agents are successfully helping more home buying and selling consumers. Sales statistics show that for 13 consecutive years RE/MAX agents have out- performed the competition, and are working hard to better serve their clients. Nobody in the world sells more real estate than RE/MAX.

9 Reasons To Buy A House Now;Palmdale Real Estate Experts

RE/MAX All-Pro; Palmdale Real Estate and Lancaster Real Estate Experts
At RE/MAX All-Pro we pride our selves on being Real Estate experts and are always researching the current housing market. Below is an article from Forbes with some important information we’d like to share with you. If you have any questions don’t hesitate to give us a call at 661.945.9461or visit our website RE/MAX ALL-PRO

9 Reasons To Buy A House Now

If you’re planning to buy a house right now, the next few months may be the best time to buy. Waiting for both housing prices and interest rates to fall may not be a good strategy for potential homebuyers since analysts don’t expect any significant declines in these two most important home-buying factors. Here’s nine real estate trends that suggest you should get into the housing market sooner than later. (To learn more, check out 5 Sunny Real Estate Markets To Watch In 2011)

TUTORIAL: How to Buy Your First Home

1. Lowest Housing Prices in Years
Nobody knows when the housing market will hit bottom, but prices are at their lowest in several years and may soon start inching back up again. So buying now or in the near future may be the right time. An abundance of bargain-priced housing is now available because of foreclosures and falling prices.

2. Interest Rates at a 50-Year Low
Interest rates are near a 50-year low, according to housing analysts. By the second week of May, 2011, 30-year fixed mortgage rates had fallen to their lowest rates of the year at 4.63%. Although mortgage rates vary from day to day, the 30-year rate at this level is an attractive inducement to first-time buyers, or buyers who want to either move up to larger residences, or others, including many empty-nesters wanting to sell and move to smaller houses or condos.

 

3. Interest Rates Expected to Go Up
As the economic recovery gains momentum, interest rates are expected to increase, making mortgages more expensive. Even a half-percent increase in mortgage interest can add a hundred dollars or more to your monthly payments, depending on the amount of your loan. (To learn more about interest rates, read Forces Behind Interest Rates.)

4. Adjustable Rate Mortgages at Record Lows
Adjustable Rate Mortgages (ARMs) are also lower now, although there are risks that interest rates may increase over the life of the mortgage and the balloon payment due at the end of the mortgage life, usually three or five years, could be substantial. Nevertheless, for new buyers who are sure they’ll have enough income to meet payment obligations, an ARM may be the best way to buy a house. Keep in mind that payments may increase on a monthly basis. For a full explanation of advantages and risks in an ARM, visit the federalreserve.gov.

 

5. Low Down Payment Mortgages Available
Low-down-payment financing through Federal Housing Administration-insured mortgages is available as an additional inducement to buy a house now. Down payment minimum requirements also fluctuate and may increase as the market heats up, so potential buyers with less cash to consummate a deal may be well-advised to buy now. 

6. Easy to Qualify, Easy to Borrow
Lending standards have become less rigid recently, so qualifying for a mortgage may be easier. Experts advise that a potential buyer become pre-approved for a loan by a lending institution – meaning that a lender guarantees to make the loan contingent on an appraisal of the property. But the good news in seeking pre-approval is that lenders are now willing to let a potential buyer take on more debt than the previous formula allowed – a percentage of monthly income. (For more on getting a cost effective mortgage, see Score A Cheap Mortgage.)

7. Lenders Offer No-Fee Mortgages
Many banks and other lending institutions are waiving mortgage loan generation and other fees and points (each point represents 1% of the loan amount), thereby reducing the cost of buying.

8. Home Builders Eager to Sell, Offer Incentives
Home builders, competing with the resale market, are offering incentives to potential buyers to reduce their inventory of unsold new homes. Incentives may include cash for furniture or free refrigerators, washers and dryers. In Seattle, for example, builders have offered opportunities to win iPads or Smart phones, and $3,000 buyer bonuses. Specific demographic groups, including military personnel, police, firefighters and health-care workers, have been targeted by builders for special offers. But virtually anyone who can qualify for a mortgage is likely to get a good deal from a homebuilder who is eager to sell.  

 

9. Motivated Home Owners Desperate to Sell
Desperate sellers of existing homes have also been offering attractive inducements to potential home buyers, including warranties on appliances, air conditioners and furnaces. Some sellers are even offering cash or have included furnishings, refrigerators, washers and dryers as a bonus to potential buyers. With so many existing homes in foreclosure or underwater – bargain prices are abound in this depressed market. (For help on buying a house, read Top Tips For First-Time Home Buyers.)

The Bottom Line
With a convergence of the factors above, all of which are favorable to the prospective home buyer, there may not be a better time to buy than right now. It’s a buyer’s market, but like everything else in life, the bargain deals won’t last. (To help determine if it is the right time to buy, read Are You Ready To Buy A House?)

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