Record Lows in Mortgage Rates Make Buying a Home a No Brainer

Do you own a home? Well if you don’t it’s time to start looking.

With an over abundance of houses in most markets in the country, tons of foreclosures weighting down the supply even further and the government doing everything they can to shore up the whole system, it may be time to call your realtor.

Mortgage rates are one of the key factors when it comes to home sales. The lower the interest rates are the more people who apply for loans to take advantage. The Federal Reserve lowers the interest rates it charges to banks in order to get them to lower the rates they offer on auto and home loans. This is all meant to spur the economy on and get buyers out of the holes they have been hiding in for the last year.

Normally, it only takes a few interest rate drops to start a stampede of buyers, but with bank failures, the stock market down 35% last year and unemployment the highest it’s been since disco was cool, buyers are still afraid. No one wants to buy a house only to have the market collapse and be in a house worth a lot less than they paid.

But it seems the government has bought its way out of this problem.

As of late March 2009, the Federal Reserve has lowered their interest rates again, allowing banks to offer mortgages at prices that haven’t been seen since 1965! Depending on your credit score banks are offering mortgages anywhere from 4.652%.

At rates this low the government hopes to encourage buyers to start putting their savings to work and getting back to making the market move. While interest rates aren’t the only key to home sales, they are such a big part that this interest rate move alone has many housing experts predicting a bottom.

Buyers have to have confidence in their purchase in order to make this move work, however. In order to show potential homebuyers and the rest of the economy that they will do everything possible to make sure the housing market stabilizes the Federal government announced radically steps. The Fed has said it will buy Fannie Mae- and Freddie Mac-backed securities worth $1.25 trillion.

Yes, that trillion with a “T”.

Refinancing Interest Surges

With these announcements last week not only are homebuyers becoming interested but existing homeowners are also perking up. With interest rates this low and a bottom in the housing market finally in the foreseeable future homeowners are considering lowering their existing mortgages by refinancing.

A lot of homebuyers bought their houses at higher rates before the housing bubble popped. Many others financed their home by getting home equity lines at higher interest rates. Now is the time to take advantage of the market, like the market took advantage of them. Lowering your mortgage rate on a 30 year mortgage by a couple of interest points and a home owner can save tens of thousands of dollars over the life of the loan.

It all comes down to this. The full weight and power of the Federal government is being used to get the housing market going. In order to make that happen interest rates are going lower and have hit rock bottom. There’s no better time than now to get out there and do a little economic stimulus yourself.