What are the Feds going to do?.....
I just read an excerpt from an interview of executives from two large real estate firms in the United States; – the same day I attended our company Awards Breakfast at which we were treated to an update by Steve Harney, my “main man” when it comes to getting up to date information on what’s happening in the real estate economy. Guess what! The messages are in direct conflict about the future role of the Federal government in the housing market. It’s no wonder buyers and sellers find it difficult to predict what’s going to happen!
A little background – banks can sell their mortgages on the secondary market to Fannie Mae and Freddie Mac. The mortgages are then “bundled” and sold to private investors. In the past, these investments were very secure, but with so many homeowners’ currently in default and foreclosure, fewer investors want to risk their money on mortgage backed securities. To take the risk, investors want more interest. The Treasury Department and the Federal Reserve Board are purchasing these securities from Fannie Mae and Freddie Mac, the goal being to free up money and maintain lower interest rates so that buyers can get mortgage financing. According to the real estate executives in the interview, the Treasury Department is prepared to continue financial support to Fannie Mae and Freddie Mac for at least the next three years. Furthermore, the government is prepared to be involved in the housing industry for as long as it takes to keep the economy moving in the right direction. On the other hand, Steve Harney has stated that the contributions from the government to Fannie and Freddie have just about reached the levels committed to, and that after March 31st, the government may back off and allow the mortgage markets to adjust independent of government intervention. Furthermore, Harney commented that the President only briefly mentioned the real estate market in his latest address, indicating that the administration intends to turn its focus away from the housing market.
Both the executives interviewed and Steve Harney agree that less involvement by the Feds will most likely mean a rise in interest rates. According to the executives, a 1% increase in interest rates will hardly be felt in the real estate industry as a whole and is not enough to slow down sales, given that home prices are still low. Steve Harney takes the view of the CONSUMER. A 1% increase in interest rates has a large impact on buying power, translating into a higher monthly cost for the same home. In other words, higher interest rates mean YOU will get less “bang for your buck.
Posted by:
Cathy Butschke
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Glenn Hanon
Congress did extend the first time homebuyer credit but time is running out. Yes you have until April to secure the right home, but beyond finding the right home, don’t let the low interest rates rise before you have time to act. Here is why a small increase in rates can affect your ability to buy that ‘right’ house. Let’s assume that you have your sights on a home for $200,000. You have 5% down or $10,000 saved up. You have calculated that your mortgage payment is $994.57 for a 4.78% interest rate. If the rates rise slightly to 5.5% your payment has just moved to $1,078.80. If your intention is to keep your payment at $994.57 per month your new purchase price is $185,000! The small increase has just cost you $15,000 in purchasing power which could mean the difference between getting the right house, or not buying at all. So before rates go up, and they will, NOW is the time to be out there finding your next dream home. For more information on how to maximize your purchase in a new market call me toll free at 1-888-HEY GLEN
If you know of someone dreaming of buying a home or waiting to up grade, congratulations. You’re in good company with The Kuchta’s. A good real estate agent can make or break your deal. You want to hire the best real estate agent you can find, which means hiring The Kuchta’s who will put your interests first, above his or her own.
With rates rising, one has to decide is it worth waiting to be able to purchase a home for less down the road vs the increased monthly payment because mortgage money is becoming more expensive. Tough choice! And some folks are waiting out the market, hoping home prices have farther to fall.
Who do you know wants to buy a house? The time is NOW especially for first-time homebuyers that can buy now because of the price range are now in the market and taking advantage of the tax credit,” which the Obama administration ushered in February.
Kelly Kuchta
the first time home buyer is out buying homes all other price ranges begin to see movement. Sara and Andrew took advantage of the $8,000 incentive and just bought their first home in Oconomowoc. The $8,000 definitely made a difference when it came time to think about buying their dream home. “Without the incentive, I think we would not be able to move forward with our new home, which we love and can’t wait to move into this May!” says Sara. With the help of their lender and REALTOR®, Glenn Hanon, Sara and Andrew grew more excited that apartment living would be a thing of the past. The credit will help with the down payment and perhaps a small improvement to their home. “2009 is the year to buy”, explained Andrew, “We were able to buy the house we wanted.” If you are contemplating a move from a rental and you think you may qualify for the $8,000 credit, feel free to call me at the office, 262-567-4349 and we can meet to discuss your dreams.
When we turn on the TV or Radio more and more often we are being told that the current economic, mortgage and real estate downturn may offer those of us who are paying attention, a once in a lifetime opportunity! You’ve heard it said “buy low - sell high” and “the time to get in is now. Today we are seeing low prices and low interest rates in years.
If you are looking for a career that gives you huge potential for creating wealth, we recommend that you seriously consider a career in real estate and why not with Shorewest Realtors. This family owned company continues to be the real estate brand most recognized by consumers, and the real estate company consumers think of first when they want real estate services.
Through Shorewest Realtors, you have the opportunity and the increased resources to leverage their brand name and industry leading programs to help you achieve maximum results and unlimited growth to your business.
Take advantage of the fact that you are working with the 12th ranked Real Estate company in the country. Receive the rewards, recognition and the respect you deserve.
