A Good Reason To Take Action Now with Interest Rates!

Interest rates for a 30 year fixed loan have once again edged down this week, averaging around 5.07%. While this is still higher than the record low rates we saw last spring, this is an extremely attractive rate for those considering purchasing or refinancing an existing loan. According to Michael Larson, an interest rate and real estate analyst with Weiss Research, rates should stay low for another month or two as the government efforts remain in effect. The Federal Reserve has been spending $1.25 trillion on mortgage-backed securities in order to prop up the housing market by keeping interest rates low. That money is set to run out by Winter, and then there may be other efforts to allow the program to last longer or so that we don't see a sharp increase in interest rates (like we have seen with gas prices in the past). Interest rates should increase gradually.

Borrowers have been seizing the opportunity, with mortgage refinancing applications up 22.5% for the week ending Sept. 4Th. Applications for new home financing was up 9.5%. Despite low interest rates, qualifying for a loan is still tough as the lenders have higher qualifying standards. All rates are not created equal. When shopping for a loan, I often tell my clients to shop "apples to apples". Make sure you are checking the same type of loan between lenders, and ask them if any or how many points are to be paid at closing to qualify for a specific rate. I always advise people to compare closing costs between lenders. Mortgage rates not only signify how much your payment will be, but are in effect a direct correlation to how much one can qualify for. While home prices may possibly edge down further - although I am seeing a large stabilization of prices, interest rates will climb and the net effect will be a similar "property cost" to a buyer.