Lower mortgage rates could mean movement in the housing market, which is good news for the nation’s construction industry. (TMP file photo of new construction at Colonial Estates.)
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Last-minute debt negotiations, erratic stock market activity, low mortgage rates – the past few weeks have been a roller coaster ride for all things finance-related.
Investors are taking their dollars out of stocks and opting for 10-year Treasury bonds, which are seen as more stable investments. It may wreak havoc to the NYSE, but it means good news for mortgage loans, which are backed by the Treasury notes.
Rates on the 30-year fixed loan were near 6.5 percent five years ago and higher than 8 percent in 2000. But in the past 10 to 14 days, mortgage rates have dropped from about 5 percent to nearly 4 percent.
This is good news for Rutherford County residents looking to buy a home or refinance their existing mortgage, says Shawn Kaplan, licensed mortgage banker with Kaplan Mortgage Partners – Access National Mortgage.
He estimated the average purchase price within the county to be about $179,000, which at a 5 percent mortgage rate would mean about $1,327 a month.
However, the same payment at the current 4 percent rate would buy a $198,000 home, depending on exact qualifications and details of the home.
For those considering refinancing their existing mortgage, Kaplan says the new rate can reduce monthly payments, especially with the 15-year loans hovering at 3.5 percent.
“If you’re wanting to hold out for a home price to drop another $20,000 … and the mortgage rates go up to 4.5 percent, you actually just lost,” he stressed. “You’ve waited for $20,000 off a home, but you’re going to lose $20,000 in interest over a short period of time.”
The same applies to homeowners who are in the position to refinance: start saving money now because waiting for an even lower rate means possibly only saving a few dollars each month.
“You’ve got a little window that’s opened up here,” Kaplan said.
“Right now is the most opportune time (to buy). The problem is, the general public is very concerned about long-term outlook of employment and finances. Those willing to take a risk, roll the dice and make the investment are the ones who are going to come out ahead the most.”
By now, prospective and existing homebuyers have heard “now is the best time to buy” for the past year and a half, Kaplan continued. Certain times – like when the $8,000 tax credit was offered – were more advantageous than others.
Once again, that time has come.
“We never thought mortgage rates were going to keep going down,” he said, adding rates haven’t been this low since 2008.
“The worst time that you could possibly sell is when everybody else is selling; the best time you can buy is when everybody else is not buying.”
Home sales in Rutherford County topped 290 in July, up 10 percent from June, according to data released by the Multiple Listing Service, which monitors real estate sales and trends.
Approximately 319 additional homes were pending sale in July, which, coupled with low rates, could mean good news for August.
“We are a lucky bunch of individuals in Middle Tennessee because our market has stabilized,” said Kaplan, who just returned from a trip to Vermont.
There, he says, homes have been sitting on the market for 10 to 12 months.
“But we still have buyers and sellers every day (in Rutherford County),” Kaplan continued. “We’re probably taking in two to three brand new applications a day and have had 12 new home buyers this month for just my team.”
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