Once again it’s the time of year for predictions – what will happen in real estate in 2009? I can’t find my crystal ball, but I’d like to make a few comments about mortgage financing and interest rates in the coming year.
First of all, be prepared to provide proof that you can support a mortgage when you make loan application. Gone – at least for this year – are the days when you can finance a home on a good credit score alone. Be sure to bring paycheck stubs, W-2’s or 1099’s and tax returns along with current asset statements to your interview with your home mortgage consultant.
Interest rates should remain excellent overall for at least the first two quarters of this year, equal to or below the best 30 year fixed mortgage rates that we’ve seen in decades. Why? In part because the Fed is buying mortgage backed securities to the tune of approximately $4 billion every trading day between now and June, and when the price of mortgage bonds remains stable or goes up, interest rates tend to stay the same or go down. If you want to take a look at monthly interest rates on 30 year fixed mortgages since 1971, there are easy to read tables available at Freddie Mac, just put “historic rates” in the search engine. Our rates as of January 9th are as good as or better than any rates during that 38 year time span.
There will be volatility this year, so if your mortgage professional is able to quote you a rate that you love, lock it before you lose it! There are many economic reports that have a high impact on the price of mortgage bonds and on interest rates, and the changes can be swift from day to day. The prime rate, currently at 3.25%, is unlikely to go up this year which makes home equity lines of credit very cheap in the short term.
I’ll leave speculation on housing prices to the Realtors© at Dickson Realty, the ultimate professionals in the real estate field, but every one I’ve spoken with has agreed that 2009 will be a wonderful time to buy in the Reno Sparks area. There are some national real estate spokespeople who have said that it’s possible that buyers may be able to buy houses this year for the lowest price – and the cheapest money – for years to come. Don’t miss out!