Mortgage Rates are Rising

As the sayings go...

All good things must come to an end.

or...

Nothing good lasts forever.

The same appears to be true for the historically low mortgage rates we've seen in the past couple years.  Mortgage rates for a 30-year fixed loan jumped to 3.85% last week, the highest since it was 3.91% back in August 2012.  The last time rates were above 5% was back in 2011. 

If you're waiting to list your home or waiting to sell your current home to try to cash in on a higher offer before you buy your new home, you just may be paying out on the buying end if rates continue to climb.

At Pickett Property Group, we are committed to helping you make the right real estate decisions for your needs.  If you're thinking of buying or selling, visit Pickett Property Group for more information.

The New Trend in Fixed Rate Mortgages...the 15 Year Loan

How would you like an extra $125,000?

Last week, interest rates dropped to their lowest point in 2011.  We saw fixed rates as low as 4.375% for 30 years, 4.25% for 20 years, and 3.75% for 15 years.  We also saw adjustable rates as low as 2.875%!  The current trend in fixed rate mortgages is to pay a little extra and get a 15 year loan instead of a 30 year.  What's the advantage?  Let's take a look:

If you have a 30 year mortgage of $200,000 at 5% interest, your payment would be $1,074 /mo (Principal & Interest only).  If you refinanced that to (or start off with) a 15 year mortgage at 3.75%, your payment would be $1,454 /mo (P&I).  For a difference of $380 /mo, you could pay your mortgage off in 15 years instead of 30 and build equity in your home much faster...an extra $21,593 in equity in just 3 years and $37,613 in 5 years.  Not only that, but by paying off the loan in 15 years instead of 30, you would save $125,000!!

Sound intriguing?  Give us a call or shoot us an email and we'll refer you to a Lender that will help you take advantage of today's low rates!!

The Real Estate Market in 2011

Everyone is wanting to know what is going to happen in real estate in the new year.  Unfortunately, there is no way to predict one way or another, but there are signs out there indicating that the market is improving.  Take a look at these recent statistics:

According to the National Association of Realtor, pending home sales rose 3.5% in November.  Based on trends from the 5 months prior, this is indicating a gradual recovery into 2011.  Affordable housing and the improvements in the economy are bringing buyers into the market.

The 30-year fixed-rate mortgage is forecast to rise gradually to 5.3% around the end of 2011; at the same time, unemployment should drop to 9.2%.

Existing-home sales are projected to rise about 8% to 5.2 million in 2011 from 4.8 million in 2010, with an additional gain of 4% in 2012. The median existing-home price could rise 0.6% to $173,700 in 2011 from $172,700 in 2010, which was essentially unchanged from 2009.


New-home sales are estimated to rise 24% to 392,000 in 2011, but would remain well below historic averages, while housing starts are forecast to rise 21% to 716,000.

While I can't guarantee any of these expectations, I can guarantee that if you are a motivated seller or buyer, WE are your motivated Realtors.  Pickett Property Group is in this business to move houses...whether you are buying or selling.  We will help you achieve your goals.  Contact us today!

Rising Rates Will Impact Home Affordability

Buyers who have been waiting for that perfect deal on a home are now finding themselves in a more costly predicament.  Record low interest rates over the past few months have made it the best time to buy a home in the fifty years...unfortunately, it doesn't look like they are going to hang around much longer.

Those who “choose to wait until prices come down more” are gambling that interest rates will hold steady or drop. However, the truth is even a 10 percent drop in home prices is nullified by a 1 percent increase in interest rates. The figure below illustrates how this works for a $250,000 home purchase and the relative likelihood of each scenario.

When thinking about which is more likely: an increase in mortgage rates or a further drop in home prices...consider the findings below based on the last ten years of monthly home price and mortgage interest rate data:

1.  A one percent increase in mortgage rates is ten times more likely to happen than a ten percent drop in home prices.

2.  A one percent rate increase more than offsets a ten percent reduction in home prices.

3.  When interest rates fall by one percent, the total interest paid is almost three times more than the interest savings from a ten percent drop in home prices.

4.  The probability of both happening at the same time is ridiculously small, and homeowners would still pay 15 percent more in interest over the life of the loan.

Interest rates have dominated the news in recent months as we’ve shattered record low after record low. Potential home buyers need to understand the positive financial impact low interest rates have on the cost of home ownership and the thousands of dollars that can be saved over the life of a typical mortgage loan.

When you're ready to list your home or if you're looking to buy, feel free to give us a call.  We've helped hundreds of families and we'd love to help you!  Email, text, or give us a call anytime...913.787.1870 or PickettPropertyGroup.com.