Besides helping homeowners and home lookers, I am teaching Real Estate through the Weichert Real Estate School. Right now I am teaching Pre-Licensing for aspiring agents in Maryland; Bowie, North Bethesda, and Fallsgrove.
I’d like to share some information concerning interest rates, and how they can be used when considering a new home or additions to your current home. My first advice is always go see a mortgage specialist. They can tell you what you qualify for, that can be lower than the posted rates for the day.
All loan transaction interest rates, whether they are first or second mortgages, auto loans, and credit card rates, change daily based on several factors related to the federal government. The Treasury Department auctions bonds to finance the national debt. Another is the Federal Funds rate, what banks charge each other for loans from bank to bank.
Another is simple supply and demand. We saw this recently when the Fed raised its short term rate, and banks followed at first. Rates dropped shortly after this because fewer consumers were borrowing. They thought rates were going up and the number of loans applied for dropped. Banks and consumers have to take out loans for the Fed and banks to make money, so when demand slumped rates went back down.
As mentioned, if you need to know how this affects you, see a professional. Your Real Estate agent is not qualified to give you day to day market information. But you do need advice on the day to lock in the rate for your loan, your mortgage advisor’s job is to keep up with that information.
The two facts you need to know here are that rates change daily, and that rates are established through a variety of factors that are liquid and changing. Your agent can help you get a price that you’re happy with, and can give you general advice about where to go for information. But your agent, your mortgage specialist, and your settlement company are a team, each with different specialties. Make sure you use the resources they all provide you to complete a successful transaction.
July 12th, 2014
The Washington area has always been a strong real estate market, even during 2009 and 2010 there were still steady home sales. Today the market is very strong, with good prices for both buyers and sellers.
An interesting part of the market are multi bedroom multi
bath single family and townhouse homes around $300,000 and below. Very
few of these are currently being repossessed by banks, most current
repos are a year or more old. Distressed homes are being bought, often
for cash, by investors looking to either rent the homes or renovate and
sell for a profit.
Mortgage rates are low too. A lot of
are afraid of escalating mortgage rates once the Fed starts moving this
fall or winter. I would beg to differ, the Fed can’t simply and
arbitrarily raise rates.