Are Mortgage Interest Rates Headed Up?

Are interest rates headed up?

Most experts are saying, yes.  The Federal Reserve has been artificially keeping rates low for the last year.  At the end of March, The Fed has announced they will quit buying Mortgage Backed Securities, which will cause rates to rise.  Financial experts are saying rates may rise for 1-1.5% and that it could happen in short period of time.  This could be devastating for a home buyer.

If rates rise 1%, you could see your purchase power decrease by 10%.  On a $250,000 home, that is a $25,000 drop in the amount of home you can purchase.  What about if rates go up 2% and rates end up in the 7’s?  We are talking a 20% decrease in purchase power, or in our example, fifty-thousand dollars!

Now is the time to buy.  Take the $8,000 tax credit for 1st time home buyers and couple it with the low rates that The Federal Reserve is giving us and you are talking about a nice gift from the government.  Right now, you have the best incentives in history to buy a home, but they are likely going away.  In order to get the $8,000 tax credit, you have to be under contract by April 30th 2010.  With the possibility of rates going up toward the end of March, you would need to act now.  It can take a month or more to find the right home and a month to close on your home loan.  Don’t let this opportunity pass you by.

Toby R. Lane
Senior Loan Consultant
Academy Mortgage Corporation

Direct:  404-574-2609
Cell:  404-483-6040
eFax:  404-924-4990

www.atlantagamortgages.com

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