Have you heard the news? Mortgage interest rates are down to 4-1/2%. Mortgage interest rates have been hovering around 6% for months. But the Feds are trying to stimulate home purchasing and have been working to get mortgage rates down. What does that mean to you when purchasing a house? (Oh – by the way, home sales are at a 3 year high in Sonoma County. But, I digress.)
What does 4-1/2% do for you? Let’s compare a 6% rate to a 4-1/2% rate and your ability to qualify for a home purchase. If you buy a home for $300,000.00 and have a mortgage on it of $270,000.00 your payment @ 6% would be $1,620.00 a month. At 4-1/2% the monthly payment would be $1,368.90. That’s a savings of $251.10 a month.
Put another way – let’s say last month you qualified to buy a home for $300,000.00 because the rate being used to qualify you was 6%. What would you now qualify for since the rate is 4-1/2%? Let’s use the same 6% payment you qualified for before. Your payment of $1,620.00 today will get you a home at a price of $352,000! Wow, that’s quite a bit more!
We have been saying for months now that Sonoma County’s property values have hit bottom and it’s time to buy. Well – more evidence is out – home sales are at a 3-year high in Sonoma County. We knew this was coming several months ago. We are advocates of buying a foreclosure. They are 15% below the other houses on the market and are selling like hot cakes! You can finally afford to buy. Now add to all this news interest rates at 4-1/2%, there will be a bigger surge.
IT’S TIME TO BUY! Rents are going up in this tight rental market (where do you think the people are going when they lose their home to foreclosure? They must rent… making the rental market tight.)