Guest Blogger: Today's post is written by Sacramento Mortgage Expert, Matt Gouge. All of his contact info and more can be found at this website: www.mattthemortgageguy.com. Thank you Matt for providing this great info for potential buyers in our Sacramento Real Estate Market.
MORTGAGE INTEREST RATES… Where are
they headed?
Today being
the 2nd day of the Federal Open Market Committee meeting it seems
only fitting that I write about interest rates and where we are headed. This
afternoon is the point in their meeting where they announce their policy
decision (typically whether to change the fed funds target rate)…
When the Fed
met in prior months they used the word “patient” when referring to when they
would begin a federal rate hike. This key word was missing in the March meeting
which some may feel is an indicator that the rate hike is coming sooner rather
than later. In laymans terms, rates are going to go up, it’s not an “if” but a
“when”…
I have my
opinion about what exactly is going to happen to interest rates in the future
but my opinion is merely that, an opinion. I will get to my crystal ball
forecast at the end of this article but first I would like to make a simple
point that folks should be aware of…
What everyone should know…
Rates are
constantly moving. By constant I mean that rates change on a daily basis. There
are economic factors that influence rates that are being measured, monitored,
analyzed daily. Those of us who follow what is going on in the markets and pay
attention to data know that there are numerous reports that can have an impact
on rates and the affects can be dramatic and far reaching if the numbers
presented are different from expectation…
What can we do?
As a
mortgage professional who advises clients on a daily basis and really aims to
educate and assist clients in making informed decisions I come across this
question often. “What do you suggest Matt?”
The reality
is that it truly is a great time to buy. I say that with sincerity and with
confidence for a couple of reasons. Today’s historically low interest rates and
great, stable loan programs are making homeownership affordable and safe. I use
the word safe because we all know someone who entered into an adjustable rate
mortgage or interest only type of loan 8 years ago that exploded on them when
they saw what was in the fine print. These loans don’t exist today. Most people
who qualify for a mortgage are able to get a 30 year fixed rate under 4%. Most
of us don’t realize how amazing that is. Forget the fact that the home you
wanted is $40,000 more expensive than it was last year. From a financial
standpoint the loan terms you enter into when you purchase your home are more
important than the price. For example, a 1% increase in interest rate is going
to increase your monthly payment by about $200/mo on a $300,000 loan.
So my advice
is to make it happen. Find a payment that you are comfortable with, then ask a
mortgage professional to translate that payment and your down payment funds
into what price range you should target. Then settle into a home that you own.
A home that will appreciate in value and a payment that will remain constant
despite what the rents around you do. We all have to spend money on a monthly
basis to have a roof over our heads, we might as well spend it on something we
own.
Finally - getting to your rate
predictions…
Ok, Based on
what I know and how the wind is blowing today here are my short and long term
interest rate predictions. Rates will remain low for another 6 months with a
fed increase beginning in late 2015- early 2016. In the window of 18-24 months
we will see a SLOW uptick in rates that will put us in the low 5’s for a 30
year fixed rate conventional loan in mid 2017.
As always I
am more than happy to answer any mortgage related questions from future clients
or real estate industry friends. I hope to hear from you soon, Please feel free
to reach out anytime!
Connecting people and homes, one loan at a time…
#MattTheMortgageGuy
916-529-7600
NMLS # 1088993
Thanks again Matt for your guest blog post.
clear skies,
Doug Reynolds
Realtor
916-494-8441
