Home Buyers

Landa’s Lowdown – Why Aren’t Interest Rates Any Lower?

“Why aren’t the interest rates any lower?!?” The lament heard by loan officers everywhere. Contrary to the popular belief that when the Fed’s cut the Federal Funds rate that mortgage rates follow in lockstep; mortgage rates are actually about the same as they have been for the last three weeks. Which is, on average, 5.75% for the lowest-fee 30-year conforming loan. If you need confirmation; check out www.freddiemac.com. They provide a weekly survey that is minus any sales pitch or media spin.

It’s tough for hard working loan officers to overcome the media hype that accompanies a “dramatic” Fed move in rates. Is a 1.25% cut in 8 days in the Fed Funds rate “dramatic?” Absolutely. Does it mean that conforming loan rates are 1.25% lower than they were last month? Absolutely NOT.

Mortgages are priced off the 10-year Treasury bond – a wholly different instrument than the Fed Funds rate or the Fed discount rate. Currently, the yield on the 10-year note is hovering at around 3.60%. That yield gives us 30-year mortgage rates under 6%, which is much better that seven or eight months ago.

This move by the Fed will certainly help homeowners who are currently in adjustable rate mortgages. It can even be advantageous to recent home buyers who locked their rates in the 6.5% range last summer. Depending on the size of their loan, a refinance may be in order. And, it’s certainly a GREAT situation for home buyers in the market right now – they can buy more house for the same monthly payment they were looking at last year.

The rate cut seems to be having the immediate sought-after effect – a shot in the arm for the ever popular “Spring” housing market. Now is a great time to buy – there is lots of inventory out there to pick from and great financing options.

Written By:
Terri Landa
Mortgage Advisor
Coldwell Banker Home Loans
Office: 847-382-3780
Cell: 847-921-6817
Email: terri.landa@mortgagefamily.com
TerriLanda.ColdwellBankerHomeLoans.com

Tags: 60010, Barrington, Barrington Real Estate, Illinois, Mortgage, Interest Rates, Fed Rate Cut, Home Buyers, Refinance, FreddieMac, Home Financing

Home Buyers

Real Estate Investing – MADE EASIER

When I got married earlier this year, I became part owner of my husband’s investment property. It’s a brick two-flat in Chicago in Lincoln Square and it has definitely been an adjustment. We live upstairs and rent out the unit below to tenants who are pretty agreeable and generally on time with the rent. It’s a new sort of living arrangement for me, it’s a little small for the two of us and, to be honest, it’s been the source of several heated arguments.

They went a little something like this:
I say: “Shouldn’t we focus on purchasing a home we can grow into rather than stretch to afford a rental property that’s too small?”
Bill says: “Don’t you see how this living situation will enable us to have another source of income down the road? Can’t you live with this for a while until we can afford both?”
I say: “Wait how long? Are you crazy! Why didn’t we talk about this before.”

You get the idea. Bill’s a long term thinker, I live more for the moment and we would both benefit by meeting somewhere in the middle.

This all comes to mind as I decompress after this very intense course on building wealth in real estate that I completed earlier this week. When I look closely at the numbers, what I learned in this class made my husband’s arguments make a lot more sense. In fact, what I learned opened my mind to a whole new way of thinking. Now I’ll admit that I’m still more excited than ever to buy our first place together, but I’m not so quick to complain about where we are today.

Not only did this class help put our personal investment choices in perspective, but I’m now armed with a wealth of information to help our clients make smart choices about investing in real estate rental properties in Chicago or in the Suburbs. Have you ever thought about purchasing a rental property? Would you like to learn more? I’ve got some great formulas that will help calculate the estimated post-tax return on your investment. Are you currently comparing two property options? If so, these formulas might help make it a no brainer. Are you considering investing more in the stock market? WAIT! If you’re a long term thinker and planner like my husband Bill, let’s talk about some real estate options first.

Thanks for reading,
Liz Luby
The Luby Group – Coldwell Banker Residential Brokerage
847-691-3150
www.TheLubyGroup.com