Mortgage Interest Rates at Historically Low Levels

By Karen Goodman 

Nowadays everyone seems to be talking about mortgage interest rates.

Why do people track the interest rates daily?

Some people are news junkies. Others are considering purchasing a home or wondering if they should refinance their current mortgage. Others simply follow mortgage rates as away to gauge the overall economy’s health.

The result of this daily mortgage watching is that many people are completely unrealistic when it comes to deciding what is a good mortgage rate.

Mortgage Rates Since 1974

I know that it is frustrating when you realize that you just missed out on an interest rate of 4.75% for a 30 year fixed mortgage. That rate that lasted for about 3 seconds a month ago. You might feel cheated knowing that you are now stuck paying over 5%.

Seriously, anything under 6% is a fabulous mortgage rate. Just look at the chart below at the average interest rates for mortgages since 1974.

Historical interest rates chart 1974-2009

30 Year Fixed Rate Mortgages:

The safest mortgage product is a 30 year fixed rate mortgage (FRM). The average rate for 2009 is lower than it has been in 36 years…even lower than it was during the housing boom years of 2002-2005.

Adjustable Rate Mortgages & 15 Year Fixed Rate Mortgages:

Reporting agencies didn’t start tracking 5 year ARMs until 2005, but the rates seems to match the 15 year fixed rate pretty closely. However, there is a big difference between these two mortgage products.

Borrowers get a discounted rate on a 15 year fixed rate mortgage because the bank is taking less risk. The bank is getting their money paid back in 15 years instead of 30 years. The interest rate is locked for the full 15 years, but I’m guessing the risk of default is very low for people that choose 15 year loans vs 30 year loans.

People that choose an adjustable rate mortgage also get a lower interest rate compared to 30 year fixed rate mortgages but they still get to take 30 years to pay it back. Thus, they can borrow more for the same monthly payment amount. The problem is that the rate is only locked in for 5 years (or 1 year for a 1 year ARM). Then the rate can go up. The borrower gets a discount up front because the bank knows that they will get a higher interest rate later if rates go up.

During the housing boom, it seemed that almost everyone was choosing an ARM mortgage. The problem is that too many buyers didn’t plan for the worst case scenario. When their rates adjusted up, they could no longer afford their payments.

Adjustable rate mortgages can still be a good choice for some buyers.

I spent the first 5 years of my real estate career working with relocating buyers. Three years later, 1/3 of them had already moved. For relocating buyers who know that they will move in 2-5 years, an ARM is the smartest choice.

An ARM mortgage can also be a good decision for someone who knows they will move in the next few years. Five years after I bought my first house, interest rates dropped dramatically and I looked into refinancing my mortgage. I knew that I would move within 2-3 years, so I went ahead and got a 5 year ARM. It gave me a few extra years as a safety net, and I got the discounted ARM rate.

What is a Good Interest Rate?

Between 1974 and 2000, the average interest rate for a 30 year fixed rate mortgage only dropped below 7% one time.

The current interest rate of 5.375% is an amazing rate.

Don’t forget these low rates also come with discounted home prices due to the recession and a buyer’s housing market. It’s hard to imagine a better time to buy a home.

For first time buyers that also qualify for the $8000 federal tax credit, there won’t be a better time to buy for years to come.

But time is running out for first time buyers.

The federal tax credit only applies to purchases that close by December 1, 2009. Buyers that want to take a few months to find their perfect home along with the standard 4-6 weeks to close, need to get started soon or they could miss the deadline.

Live in the St. Louis area?

Email me or say hello on twitter if you would like to discuss your plans to purchase a home.

Not in St. Louis?

I have a network of experienced agents throughout the country that I can recommend. I’d be happy to talk with you about your needs and refer you to an agent in your area that will watch out for your best interests.

If you enjoyed this post, make sure you subscribe to my RSS feed!

June 17, 2009

1 Comment

Filed under: Buyers, Market Conditions

Tagged:

Mortgage Interest Rates Update for 6/15/09

By admin 

by Kerby Claney
Vice President - Stifel Bank & Trust
314-317-6873
email

Today’s Mortgage Rates:

mortgage-interest-rates-update-6-16-09.png

If you are in St. Louis, I’m happy to meet you wherever it is most convenient for you to discuss your financing needs.

I also serve clients needing mortgages and refinancing throughout the United States. Give me a call and we can talk about which mortgage product would be best for your individual situation.

Not sure if you should refinance? I’m happy to offer a free no-obligation consultation to help you decide if it makes sense for you to refinance.

The Fine Print:

The interest rate you receive will vary depending on a number of items including the down payment amount, credit scores and the length of time between rate lock-in and closing. To discuss fees and what your interest rate would be for you, feel free to email or call me to discuss your individual situation.

All rates are based on zero point loans.

*** This information is not intended to extend consumer credit as defined Section 226.2 of Regulation Z. Interest rates, program terms and conditions are subject to change without notice.

If you enjoyed this post, make sure you subscribe to my RSS feed!

June 16, 2009

Leave a Comment

Filed under: Market Conditions

Tagged: ,

Transform Your Kitchen through New Lighting

By Karen Goodman 

When I bought my first home, I was on a tight budget. I found a great fixer upper in Rock Hill and proceeded to spend the next few years going from one project to another. When I was ready to upgrade to a bigger home, I knew that I wanted a home that wouldn’t need as much work.

Almost Move-In Ready

I was lucky. I found a house that gave me just about everything I wanted. The house was renovated 5 years earlier, so most of the big projects were finished. No house is perfect, so I did end up redoing two bathrooms as soon as I moved in. Later I added a backyard patio, landscaping, and finished the basement.

One of the reasons I was excited about the house was because the kitchen was already renovated. My last house had 1950s cabinets and appliances that I never got around to replacing (though I did have the avocado green oven painted black!). My new house had walls removed so that the kitchen opens up to the adjacent living and dining areas, maple cabinets, tons of counter space and new appliances.

The only thing that it was missing was missing was decent lighting. The prior owners chose a center light that isn’t bright enough for the space and the lighting over the island was hung off-center.

Three years later and I still haven’t gotten around to fixing the lighting.

CSN Lighting to the Rescue

I was really excited when I was contacted by CSN Lighting about featuring a story on my blog that could show how lighting could transform a space. They offered to provide me with some lights for my kitchen so that I could show you the difference that it really makes.

After a long struggle, I decided to start with undercabinet lighting. Eventually I will replace the ugly center light with a canned light, and have pendants installed over the island, but the most immediate need was to get better task lighting in the kitchen. Undercabinet lighting will definitely solve that problem.

Updated kitchen

In the next few weeks, I’ll be getting my new lights installed. When I do, I’ll follow up this post with some pictures that show the difference undercabinet lighting can make.

If your kitchen lighting can use some improvement, take a look at the tips below from CSN Lighting to help you transform your kitchen.

Renovating Your Kitchen with Lighting

undercabinet-lighting.jpgWhether you’re looking to make a major improvement to your kitchen or are looking to find a way to optimize your existing space, lighting is one feature that is guaranteed to please your needs. Incorporating this type of update in your home not only will enhance the look and feel of your kitchen but it will also help you in your culinary routine while you’re preparing a family dinner or entertaining guests. Lighting certainly sets the tone in any room which is why it’s important to familiarize ourselves with the latest and greatest fixtures in the market today.

One section of our kitchen that is often overlooked is the cabinetry that holds an assortment of cookware, bakeware, and various cooking ingredients needed on a daily basis. While we’re cooking, there is a lot of time dedicated to tracking down a cooking utensil or appliance and this can be attributed to poor lighting. Many items get pushed to the back of the pantry, making it impossible to find something when we really need it. A great way to keep tabs on all of our kitchen appliances and accessories is by installing undercabinet lighting either with a plug-in puck lighting system that is easy to set up in an existing cabinet or with a hard wired lighting system that can be installed within your kitchen walls.

Once you’ve taken care of the dark corners of your kitchen, it’s time to hone in on the most popular space used for prep work and cooking: the kitchen island. While recessed lighting installed above this area works nicely, the addition of pendant lighting is sure to turn your space into a stunning space. With the variety of pendant lighting styles that range in any design from traditional and modern to rustic and casual, you’re sure to find the perfect light fixture that will accommodate your home’s existing style while illuminating your cooking space. Add a set of pendants that include three to five fixtures depending on the size of the lamp shade and the length of your kitchen’s island countertop in order to fit nicely within the area and provide enough lighting during your cooking routine.

As mentioned earlier, recessed lighting is a great option to consider for your kitchen island but can also be used in a number of different areas when you’re looking to add a simple, clean lighting design. Many homeowners prefer this type of task lighting as one switch can control a small portion of the kitchen, which therefore cuts down on the energy of having to use one large light source to illuminate the entire room. Depending on where you are preparing your next meal, you’ll be able to control the perfect amount of light and energy you need with recessed lighting at the flick of a switch.

If you enjoyed this post, make sure you subscribe to my RSS feed!

June 15, 2009

Leave a Comment

Filed under: Homeowner Tips

Tagged:

Older Posts »