Unless you have been living in a cave, you most likely know that the U.S. Economy is at its lowest point in recent history. That is certainly not good news. But there is a silver lining: Mortgage rates tend to fall when economic news is bad. Basically, mortgage rates are tied to the Bond market so when the economy is weak, money flows out of Stocks and into Bonds. When Bonds go up, interest rates go down.
For a very short period of time at the beginning of this year, we saw some rates as low as 4.75%. It has crept up to the range of 5.00-5.25% since then, for borrowers with excellent credit. If you own your home or are considering buying, act now to take advantage of current low rates for refinancing or purchasing. A word of caution: beware of online lenders that advertise super-low interest rates. They make thier money by adding fees and points on the "backside" of the loan. Call me anytime and I'll connect you with a trusted local lender.
Let's do some math. If you are financing $200,000 at 5% interest on a 30-year fixed loan, your monthly payment (principal and interest only) would be $1073.64. That same amount at an interest rate of 6.5% comes to $1264.14. That's almost $200 per month savings! Keep in mind, in the real world you have to pay taxes and insurance on top of principal and interest, so check with your lender to see how much home you can buy with the payment level you're comfortable with.
In Spokane, it is an incredibly good time to buy a home, not only because interest rates are great. We also have the classic Supply and Demand principal bearing out: Lots of homes for sale in Spokane means lower prices to you as a buyer. Spokane is experiencing a rare "Buyer's Market" right now, but that could change if a big chunk of the inventory is snapped up in the hot Spring and Summer selling season.
Back on the topic of interest rates... as a general rule, weak economic news means lower interest rates, while positive data causes interest rates to rise. Federal Reserve Chairman Bernanke has stated the recession will be over by year-end if the banking industry is stabilized. Also, the distribution of stimulus money will soon begin to positively impact the various economic indicators that influence rates. Every time this type of positive news is reported, interest rates will crank up a hair, which means we could be back to 6-7% in no time.
If you are looking to buy, we'd love to help you find the home of your dreams. Or, if you know someone who is looking to buy, your referrals are appreciated! And don't forget - there is an $8,000 tax credit for First Time Buyers if the sale closes before December 1, 2009! See my related blog post or call Darla at 509-270-0782 for more info!
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