Fed Holds Interest Rates - What the Fed decision means for you…

By
Real Estate Broker/Owner with Lazarus Realty
Lazarus Realty
Lazarus

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Read CNN's staff writer Jessica Dickler's take on today's action (or non-action) by the Fed. [Article Here] This is what caught my attention:
"So if you are in the market for a house, now could be the time to pull the trigger before rates rise even further. As Tyson points out, yields on 10-year treasury notes are still relatively low, an indication that 30-year mortgages could still be a good deal."

If you're considering purchasing a home and but you believe prices will drop another 10% over the next year you will be wise to consider as well where you think interest rates will be a year from now (unless you intend to pay cash) and here's why.

Lets say you plan to buy a home with a loan amount of $240,000 at today's rate of approx 6.25% your payment would be $1477.72

Now let's assume that next year that same home has dropped 10% in price so now you only need to finance $216,000 (10% less) but the interest rate has moved up one percentage point to 7.25% -- your payment would be $1473.50 -- or about $4.00 less.

If rates move up one and quarter percent higher to 7.5% your payment would be $1510.30 and you would be paying $33.00 MORE for $24,000 LESS money.

KEEP INTEREST RATES IN MIND WHEN CONSIDERING WHEN TO BUY A HOME.

© Randy "Lazarus" McAtee
Owner/Broker

 

 

 

 

 

 

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Rainer
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Veronica DeCarolis
Weidel Realtors - Flemington, NJ

Thanks for putting some numbers to the message.  Veronica

Jun 25, 2008 01:16 PM #1
Rainer
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Lisa Lambert
The Law Offices of Elisabeth A. Lambert - Fresno, CA
Esq. 1031 Exchange Expert

Lazarus:

Great example of the dilemma facing some home buyers. That's very helpful information.

Check out my recent blog post about the differences between the Mortgage Debt Relief Forgiveness Act and state Anti-Deficiency laws.

Jun 26, 2008 10:15 AM #2
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Rainmaker
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Randy "Lazarus" McAtee

Owner/Broker, Lazarus Realty, Fresno California
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