INTEREST RATES EXPECTED TO HIT OVER 5 PCT NEXT YEAR PURCHASING POWER DROPS RADICALLY

Dated: 09/12/2014

Views: 1228

I have been reading many articles to keep up to date on the economy and the markets , especially Real Estate. It is important as the broker of West Los Angeles Real Estate Group that I can give my clients up to date information so they can make there own decisions informatively.

Last week the mortgage rates ticked down to close to 4% , not the all time lows we have seen a year or so ago but still extremely low. On top of that Jumbo loans , I have written about in a previous blog, are near or even below conforming loans, a very rare happening.
                                                                                               
What is conforming or jumbo loans? A very simple answer, this holds true in most of the country, conforming loan limits for a single family home is $417,000 the Fed backed FHA has determined that the higher cost areas of the country should raise conforming and they have two stages one at $625,500 and one at $721,050. In the past these higher limits interest rates did go up with Jumbo (over conforming) being the highest. Now this phenomenon where Jumbos are close to conforming will not last. Today I believe cash is not king get your 1.2m loan at 4.10% and use your cash for better returns.
Ok, where am I going with this... read this article  
Interest Rates Near 4% Expected to Go to over 5% next Year
This along with many other article and talking heads are predicting over 5% interest next year. What this means to you the home buyer;

                                            $500k mortgage @4.0% -- P & I  = $2387/mos
                                            $500k mortgage @5.2% -- P & I =  $2714/mos  

                                           $550k mortgage @4.0% -- P & I =  $2625 /mos
As you can see it is not about house prices going up and down as much as the interest rates... watch and be aware of interest rates more then home prices
                    
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Robert Schmalz - BRE 01813025

DBA "West Los Angeles Real Estate Group" ....

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