Wednesday, December 10, 2008

What Will A Low Rates Economic Stimulus Program Do For Me?

What Will A Low Rates Economic Stimulus Program Do For Me?

There has been talk out of Washington, D.C. lately about offering Low Rate Fannie Mae and Freddie Mac real estate loans to stimulate the economy. The banter has centered around the idea of 4.5% interest rates. That certainly will initiate action, but one must look at the situation realistically to ascertain how it will affect you.

There are no actual details now as there are no programs, its just talk. Some ideas have been floated, and it is important to know the limitations that are being considered for this program if you are basing your immediate real estate plans on it. Re-fi’s are presently excluded, you won’t be able to refinance your existing higher-priced loan at that low rate. In fact, there is talk that it will only be for first time home Buyers.

Regardless of who can qualify, what does it mean for those who do? Here are some examples to illustrate in dollars what the percentages mean to a Buyer: A $200,000 loan at 4.5% would cost $1,013 monthly. Just a few weeks ago loans were around 6% and that same loan cost $1,199, or $186 per month more! Another way to look at it, if you qualified for the $1,199 payment, and rates go to 4.5% you can buy $36,655 more house if you are so inclined.

So it sounds like a good idea to wait for the low rates, right? Well… maybe. Rates are really pretty good right now. We had a customer lock in a loan this week at 5.2%, or just $84.85 more monthly than the 4.5% rate would cost. Is it worth the wait to see if: 1. The lower rates do, in fact, materialize, 2. You qualify for the program(s) they offer, and 3. The property you want qualifies for the program(s).

Our Advice: If the real estate loan economic stimulus program becomes a reality, and you qualify, it is important to remember that there are people just like you out there that will also benefit. That means you will probably have competition for the home you want to buy since most of the first time home Buyers will be in the same price range that you are in, $120-300,000. That is already a very active segment of the market in which homes that are priced right are selling, some with multiple offers. The Rate Stimulus program will not only generate additional buying competition, it could make owners “proud” of their property to the extent that they adjust their price upwards. That is part of the intent of the program, to stop the real estate price freefall.

Prices and interest rates are great right now! If you are considering buying work with your agent to identify your true wants and needs, and what is available in the market for you to buy. You will likely be wonderfully surprised. After that… take action! Don’t wait for something that might not be forthcoming – control your own destiny and future emotional and financial happiness. When it comes to choosing professionals to assist you with your real estate needs…
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472.

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