http://www.youtube.com/watch?v=1TIqwPqIXlQ&fmt=22
Welcome to the Weekly KickOff!
We've switched gears from the Weekly Recap to empower homeowners with news that may impact their largest investment, their home.
What is happening to interest rates? What is causing this sudden increase?
Last Wednesday the 5 year bond were auctioned flooding the market with no buyers on the market. Keep in mind the major purchaser of Bonds and most importantly Mortgage Back Securities has been the Federal Reserve. With a increase in Bonds available, Wall Street saw a major sell off and a move to Treasuries. With this sudden exodus yields spiked making mortgage rates to increase. Yes in just one day we say the rates of 4.75% disappear and move to the highs of the day closing at 5.50%.
There was a pull back with some investors thinking that it was oversold, possibly it was. Opening the week more concerns were raised about U.S. equities when China began to publicly question if the United States will be able to repay its debt. China being a major investor in U.S. Equities and could cause rates to hold at higher levels. Should countries around the world begin to believe that we will not be able to honor our debt rate can move even higher. Some of the major financial institutions have now began to speak about rates below 5.00% may be coming to an end.
The economy recovering? We have all heard media forecast the current recession ending by the close of summer or the beginning of the 4th quarter. Great news! China has also commented that production is beginning to return as orders for manufacturing is coming in from all countries, here another sign that the global recession may be coming to an end. Great news! All being good news economically but to home owners this could mean that rates would be higher in 2010..... Timing has always been our stand point.
Lets break down some key points why timing is key!
$8,000.00 First time home buyers tax credit, which may be available at closing soon Interest rates below 5.00%
Housing at their lowest levels in almost 10 years
Buying power stretched to negotiate closing costs, points, buy down points and escrow reserves
FHA financing for 3.5% down on homes
105% home affordable loan to refinance
Refinancing and Buying with historical low rates
Now lets look at what happens when interest rates spike!
For every $10,000 and interest rates increasing 1% monthly payments increase $6.11
For a $300,000 and interest rates increasing 1% monthly payments increase by $183.31
What can you use $183.31 today, to pay for other expenses ?
Timing is key, waiting to long in the end can cost you more, this is why we emphasize so much to work with a mortgage professional who understands the market and is proactive in the financing process.
Stay tuned for more to come!
As licensed loan originators in the State of Washington we would like to assist current and future homeowners.
Thanks!
The Mortgage Reel
http://www.seattlemortgagereel.com
About the Author
Assisting current and future homeowners to achieve the American Dream of Homeownership.
Creating a fundamental foundation on the responsibilities of homeownership to a financially manageable position.
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