Time to buy a Home

Mortgage rates have dropped dramatically this week.  According to the article in Yahoo Finance The benchmark 30-year, fixed-rate mortgage fell 11 basis points to 6.31 percent, according to the Bankrate.com national survey of large lenders.  This shows a downward trend in fixed mortgage rates.  A year ago the index was 6.32. 

What does this mean to us in Danville, CA?  The perception is that mortgage rates are going up do to the fact that many home owners have what is called an option arm or a variable rate mortgage.  These mortgages are tied to variable indexes that have been going up.  However, the fixed rates are actually stabilizing or even going down.

The real estate “bubble” that consumers have feared is in fact overly exaggerated.  Sure home prices have leveled off, but that’s a good thing for the economy along with affordable mortgage rates.  No one wins if the people buying the home can’t even afford the payments.  We at Legends Realty see that demand here in Danville CA is rising again.  We’re even starting to see more multiple offers in our real estate office.  This will cause prices to start to rise once again.

 30-year fixed
This week’s rate: 6.31%
Change from last week: -0.11
Monthly payment: $1,022.38
Change from last week: -$11.87

15-year fixed
This week’s rate: 6.08%
Change from last week: -0.11
Monthly payment: $1,399.51
Change from last week: -$9.85

5-year ARM
This week’s rate: 6.17%
Change from last week: -0.13
Monthly payment: $1,007.36
Change from last week: -$13.95

What about foreclosures?  Foreclosures are up.  Sure they are.  What do you expect when banks offer such enticing programs like 100% financing and even 110% financing for the past 5 years.  These mortgages often are only fixed for 1-3 years.  Once that time has elapsed the rate goes up, often dramatically and so does the payment.  It’s tough to pull money out of home with no equity built up.

 I’m sure we’ll be hearing more on this.