On the Evening MyFoxNews.com news in Cleveland Ohio they reported that "Low Mortgage Rates are Coming". Here is a link to that news report. The news report was based upon a proposal by the Federal Reserve that is described here. The proposal is to make money available to Banks if they agree to lend the money to home buyers at a rate set by the Federal Reserve. The article makes reference to a 4.50% - 30 year fixed rate which is quite attractive.
Anyone that is considering purchasing a home should talk with a lender now to make sure they will be ready to make a purchase when and if that program becomes available. Any potential buyers should also ask themself if they should wait for the prospect of that GREAT RATE or make a purchse today because it is possible today(December 5, 2008) to get a 30 fixed rate at 5.00%.
In the past it was always said that the LOCATION, LOCATION AND LOCATION were the three things that most affected the price of a home. I understood the logic of that statement as home prices were being increasing in the past. In the economic times of today, we need to look further into the Truer factors that affect the value of a home. Supply and Demand were the driving factors in the past and they are still the driving forces today when it comes to home prices. Supply is great and demand is low for the homes that are on the market. Demand has decreased for a number of reasons and it not a part of this posting.
Also because of liberal lending that occurred in the past housing prices rose because people looked at homes and Real Estate as investments instead of Housing for families.
The purpose of this post is to show that it is not always best to wait for a GREAT PROPSED RATE OF 4.50%. If we are at or near the lows that have adjusted home prices, then when consumer confidence or incentives such as this 4.50% rate come, we should see increased demand for homes. Applying the Supply and Demand principle, when this occurs home prices are more likely to increase than Anything else. Now look at this chart, On a $105,000 loan at 4.50% would cost you $532.02 (Principle and Interest). If you were able to purchase the same home today with a $100,000 loan at 5.00% your payment would be $536.82. The payments are very similar.
Look at this chart do you want to wait and consider a purchase today.
| Loan Amount | Interest Rate | Monthly Payment |
| $100,000.00 | 5.00% | $536.82 |
| $101,000.00 | 4.50% | $511.75 |
| $102,000.00 | 4.50% | $516.82 |
| $103,000.00 | 4.50% | $521.89 |
| $104,000.00 | 4.50% | $526.95 |
| $105,000.00 | 4.50% | $532.02 |
| $106,000.00 | 4.50% | $537.09 |
| $107,000.00 | 4.50% | $542.15 |
| $108,000.00 | 4.50% | $547.22 |
| $109,000.00 | 4.50% | $552.29 |
| $110,000.00 | 4.50% | $557.35 |
If you are a consumer and have considerred purchasing a home, let me know if you think it is better to find that value priced home today or wait for the Great Rates of the Future.
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