With housing interest rates still at historic lows, now is a great time to apply for a mortgage. At Register Real Estate Advisors, we have an in house lender that can get you pre-approved for a mortgage. You can complete our secure online application at RREA.com by following the “mortgage” links.
Currently, 30-year, fixed-rate mortgage rates are below 5%, according to Freddie Mac—among the lowest rates recorded in 40 years. As recently as June 2007, those rates were almost 7%, and they were in the double-digits a little over 20 years ago.
Why are interest rates so low? Much of it is due to the recent recession and its aftermath. With the economy in the dumps, demand for loans went down. At the same time, investors were looking for safe places to put their money. Many investors moved away from stocks and towards fixed-return investments such as U.S. treasury securities and mortgages. The Federal Reserve increased funds in the financial system to keep interest rates low and to support the mortgage market. The combination of weak loan demand and the influx of funds translated into low interest rates on mortgages and other loans. This is a great advantage for home buyers that have good credit.
Since the middle of 2009, the economy in the United States has gotten better, but the recession did not end quickly and continues to drag on. The economy is still in the early stages of recovery. The interest rates will probably go up over the next two years, so homeowners should take advantage now. Why aren’t more taking advantage now? Some don’t have good enough credit to get a loan, while others have lost their jobs and no longer have the stability of income to purchase. Others are afraid of how long the recovery of the economy will take, so they don’t want to commit to a new mortgage. If you have a good income and good credit, this might be the best time to purchase a home. This opportunity will not last forever because as the U.S. economy rebounds, demand for loans will rise. When the Federal Reserve sees that the economy is in better shape, it will probably take away the additional liquidity it has injected into the financial markets and interest rates will rise in the not too distant future. Most consumers do not realize that when interest rates go up, the effect on monthly payments can be dramatic. A $200,000, 30-year, fixed-rate mortgage with a 5% interest rate has a monthly payment of around $1,000. At 6% the monthly payments increase to about $1,200—an increase of nearly $200 a month. Total interest payments over the life of the loan increase by thousands of dollars.
Home prices have stabilized or even started to inch upwards in many markets, so it is unlikely prices will drop any more. Not could be the best time to purchase a home in American History. To find your dream home anywhere in the Houston area, call RREA today. We have highly educated, experienced agents, that can help you find the home of your dreams and protect you in the purchase of one of your largest investments. Call us to day to get started – 281.288.3500.
