Why is NOW the time to buy?
Buying a home just got more affordable. Here is the update on mortgage interest rates.
"...Freddie Mac's latest Primary Mortgage Market Survey showed rates on both fixed- and adjustable-rate mortgages continuing a three-week slide to hit new record lows. Rates on loans tracked by Freddie Mac are now nearly a full percentage point below 2011 highs seen in February...."
Who is Freddie Mac? Why does it matter what they say?
Federal Home Loan Mortage Corporation known as,Freddie Mac, is a government sponsored enterprise & Public Company headquartered in Virginia. Along with other government sponsored enterprises, like Fannie Mae, Freddie Mac buys mortgages on the secondary market, pools them, and sell them as a mortgage -backed secuirty to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. They are one of America's biggest buyers of home mortgages. They are a stockholder-owned corporation charterd by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing.
So Freddie Mac's reason for being is to keep mortgage money readily available to help Americans acheive their dream of homeownership.
Since 1971, when Freddie Mac started keeping records on rates for 30 year mortgages, there has never been a lower interest rate on 30 year fixed mortgages than this weeks all time low of 4.15 percent, surpassing the previous record of 4.17 percent set during the week ending Novmembr 11, 2010.
Rates on 15-year fixed-rate mortgages also hit a new low in records dating to 1991, averaging 3.36 percent with an average 0.6 point. That's down from 3.5 percent last week and a 2011 high of 4.29 percent in February.
To give you some perspective on the history of mortgage interest rates consider that in August of 2007 mortgage rates were 6.62% for a 30 year fixed. In January of 2008, mortgage rates were 5.68%
How does this help you as a buyer?
The impact of a 1% reduction in interest rates on a $250,000 home with a 20 percent down would allow a buyer to purchase a home that has a value of 9 percent more. Your buying power is worth 9 per cent more for the same amount of monthly payment. You as a buyer could afford to buy a home that is 9 per cent higher in value, whether it is a home in a more desirable school district or location, a home with more square footage that your family will grow into, or a home that has more amenities/upgrades already built into the home so that you will not have to invest in later on during your home ownership.
It also indicates that with a monthly mortgage payment on a home priced at $250,000 with a 30 year fixed term with a 4.25% interest rate on 80% financing, (which means a down payment of 20% and a $200,000 mortgage) would make your monthly prinicipal and interest to be about $982.00 a month.If the interest rate was 1% higher, at 5.25% you would be paying $1106.00 per month on the same $200,000 that you borrowed.
So if you are considering buying a new home and living in it for at least three to five years, NOW is a perfect time to buy!
If you have been thinking of selling, call a knowledgeable Realtor to discuss your options and the impact this will have on selling your home. A lower interest rate will allow for more qualified buyers. It also allows you the seller, more buying power, on your next home.
If you are interested in obtaining an Amortization Schedule with interest rates starting as low as 4%, email requestions@erataylorrealty.com and request an amoritization schedule and an explanation on how to calculate monthly mortgage payments of principal and interest, as well as taxes and insurance.
Portions of this article was excerpted from INMAN NEWS,, August 22, 2011.