Financial Facts: Time to buy up?
special to the daily
There is an old stockbroker saying of buy on bad news, sell on good news. And in the world of real estate we are right in that situation right now.
Home mortgage interest rates are at historic lows and real estate prices have decreased to a point where deals are out there waiting for you.
As we all know the world financial market has taken it on the chin. Big banks have closed their doors or have been bought up by other banks. The auto manufacturers have been raked over the coals by the Washington crowd. And with all this happening Fannie Mae and Freddie Mac, two quasi governmental agencies, have hit all time lows in share value and respect in the financial market.
But with all this discouraging news you have an opportunity to but up into that newer bigger better home or even better yet you have the opportunity to invest in a second home or rental property.
Right now the home mortgage interest rates are at historic lows. Thirty year fixed rate mortgages are running from four and one half percent to five percent. The short term Adjustable Rate Mortgages (ARM’s) are at an even lower interest rate.
So if you have a thirty year mortgage at six percent and you plan to stay in that home for years to come I strongly suggest that you consider refinancing into the lower rates. Or consider refinancing into a shorter amortization period.
If you owe $100,000.00 and the interest rate is six percent your payment is $597 per month. If you refinance to five percent your payment drops to $535 a month. That’s a savings of $744 a year.
Now let’s say that you want to move up into that new home. A new home, the dream home that just two years ago was out of your reach, may be affordable now as the rates are lower and the prices are down.
A $500,000.00 home loan two years ago would have a payment around $2,983 a month. Today a loan of $590,000 has a lower payment than the loan of $500,000 two years ago.
So buy on bad news and sell on goods news. Today’s interest rates are a golden opportunity for all prospective home buyers and current homeowners.
Bob Kieber can be reached at (970) 262-1199 or at firstname.lastname@example.org. He is a local mortgage lender and principal of Resort Lending.
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