Buying A Salt Lake Home ? Lock Your Interest !
If your thinking about, or in the process of buying a new home in Salt Lake, you'd better move fast and lock in the lowest interest rates since 2005.
My friend Candy Olson, Senior Mortgage Consultant at Silver Ridge Mortgage sent me an article written by Lyman King of their Midvale office. I'm going to pass it on. I hope you will find it as informative and as helpful as I have.
The article discusses among other things, why, when the Feds cut key interest rates (like they did last week) home mortgages can go up, not down. ( It's counter intuitive). The most consistent misunderstanding I have found in this business is what prospective home buyers think dictates the lowering of mortgage interest rates. In this article, Lyman has explained that......Other topics are....
What does a rate cut mean... Long Term.
What REALLY moves mortgage rates.
How the stimulus package fits.
Who benefits from the rate cut.
Then of course, What you should do next. Read the entire article........ Enjoy.
| Candy Olson
Senior Mortgage Consultant
Silver Ridge Mortgage
Phone: 801-244-0138
Fax:801-303-9280
candy@silverrm.com
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Historic Fed Move Cuts Both Ways for Borrowers
Hot on the heels of its surprise inter-session rate cut of 75 basis points last week, the Federal Reserve cut key interest rates again, the fifth straight cut since September 2007. In its statement last week, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth." In other words, economic data suggests the US is on the brink of recession, and the Fed is acting accordingly.
Who benefits from this cut?
If you have a loan that is directly tied to the Prime Rate, you will see an immediate benefit. Home equity lines of credit (HELOCs) and variable rate charge cards are the types of loans that will have an interest rate reduction on their next statement.
What does this mean for long-term rates?
Long-term mortgage rates, the lowest we've experienced in years, could actually increase after this cut, based on historical performance and recent trends.
So if you're waiting for long-term rates to fall further, don't count on it. Your best chance to lock in the lowest rates since 2005 is now. Getting your application in process now will allow you to capture a great rate before it's too late.
What REALLY moves mortgage rates?
Fixed-rate mortgage rates aren't directly tied to Fed interest rate moves. Instead, they tend to follow in the direction of other long-term government bond yields, such as the 10-year Treasury, which historically moves in accordance with the economic outlook and in advance of Fed actions. The performance of Mortgage Backed Securities, issued by Fannie Mae and Freddie Mac, is what really determines long-term mortgage rates.
How does the economic stimulus package fit into the picture?
The economic stimulus package from Congress and the White House could be a double-edged sword for borrowers. Combined with recent Fed actions, the package could create inflation and bring about higher long-term interest rates.
On the positive side, conforming loan limits are likely to be raised from the current $417,000 to upwards of $625,000. This means great potential savings for purchase and refinance candidates who live in 20 high-cost areas across the country.
What should you do next?
If you're unsure how the rate-cut or the proposed legislation affects your mortgage, don't worry, you're not alone. There's no one-size-fits-all answer. Give us a call right away. We'll review your mortgage and see what, if anything, can or should be done to make the most of your individual financial goals and needs.
For additional Real Estate Information around the Salt Lake Valley, give me a call at 801 567-0946, or visit my web site at SALT LAKE HOMES.
Remember, if your buying a Salt Lake Home, Lock in your Interest Rate.