This is really important to real estate buyers, owners, and investors!
Here is my advice. Buy now and get a mortgage with no points and plan on refinancing with a year or two....
The Treasury department is considering a plan to lower interest rates on new mortgages to 4.5% and force a lowering of refinance rates to make housing more affordable. Here is the full article:
http://online.wsj.com/article/SB122833771718976731.html
WHAT THIS MEANS...
The inappropriate use of financing products and the resulting declining housing prices is what started the economic downturn. There was a 2 year lag between when real estate started to slow down and when the whole economy started to slow down. The take away here is that real estate is a leading indicator of what the economy will do. If interest rates go down, demand will increase and housing prices will go up. Housing prices are extremely good right now and we are likely at the bottom if it hasn't already passed. If you are at all interested in purchasing real estate, you should buy before the interest rates go too far down. It is better to pay $3,000 to refinance your mortgage a year from now than to wait and pay $20,000 more on the purchase price.
If you currently own a home. I would be patient and refinance when the rates go below 5%. If you can't refinance and you are in a short term arm, you still may be in good shape because if your arm is tied to Prime or Libor, your interest rate may adjust down in the next year!
This is great news for the whole economy. The government is moving aggressively to minimize foreclosures which will stabilize the real estate market and bring stability within a year or two to the financial markets (which appear to still have some time to go before they bottom).
If you have any questions about this, please email or call me.
Tim Pierson
tim@piersonrealestate.com
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