The Federal Reserve just announced that they will leave benchmark interest rates unchanged. This is great news because the Fed's decisions on interest rates drive mortgage rates up or down. With rates currently hovering around 4% - which is remarkably low - our Triad housing market is moving along nicely: buyers are buying and sellers are able to sell. An increase would have limited the ability of many buyers and may have driven some buyers from the market altogether.
There was great anticipation about this interest rate announcement. Most experts have been predicting higher rates by year's end. After all, to spur the economy, the Fed has kept rates fairly stable since 2008. But recent turmoil in world markets caused significant uncertainty on Wall Street, which led to the Fed's decision to stand put.
But here is the caution: what we have with this decision is a window, a brief moment when we know what rates will be. The Fed meets again at the end of October and in late December. Either of those meetings could produce an increase in interest rates and many experts are confident they will.
Let's take a look at that anticipated increase and what it might mean to a typical Traid area home buyer, Mary. She's been pre-qualified for a $200,000 FHA mortgage and has saved about $10,000 for down payment and closing costs. The down payment will be 3% on her FHA mortgage, so she's looking at homes up to $206,000.
If the Federal Reserve raised rates one percent, Mary's whole plan and program would have to change. Now, instead of a $200,000 mortgage, all she would qualify for would be a $178,000 mortgage. Her new top sale price would be $184,000, a decrease of $22,000. That's huge! In Greensboro and surrounding areas the difference between a $184,000 house and a $206,000 is remarkable!
So here is the message we all should take away from today's Federal Reserve decision on interest rates: Get Busy! If you're looking for a home or think you might want to buy one in the future, NOW is the time to maximize your housing potential! You'll likely be able to afford more house right now than you will be able to afford in a few months.
There is nobody in the Triad better equipped to help you take advantage of this opportunity than The Vincent Group at GreatNest. We have the knowledge, experience and ability to help you secure a great home at a great rate. Let's get started today!
GreatNest and The Vincent Group is a full service real estate company charging a low set fee instead of a percentage commission. We serve buyers and sellers in Greensboro, High Point, Winston-Salem , Summerfield, Oak Ridge, Jamestown and surrounding areas. You can reach us at (336) 790-5210 or by emailing Steve Vincent. Visit our website: greatnest.com.