Hooray! Feds Leave Interest Rates Stat

Yesterday's announcement by Janet Yellen and the Federal Reserve's Open Market Committee (FOMC) means good news for folks in the market to buy real estate. The zero interest rate policy has been left as is and unchanged, with the Fed Funds rate remaining at a target of 0.00% to 0.25%. This policy has lasted for so long now that it has created problems for pensions, money market funds, and savers of all sorts, however it is good news for anyone looking to buy a home.

On the other hand, the Fed has made it abundantly clear that the current policy of super-low rates is an unusual measure intended to shore up the economy and will eventually rise. While no one really knows when this could happen, it is widely rumored that this could change in December 2015. Why not take action and take advantage of historically unprecedented low APR mortgage rates while we still have them!

Buying makes sense for almost anyone with a decent credit score and a steady income. A conventional loan could be secured with as little as 3.5% down, while an FHA loan could be secured with 3%. U.S. Military Veterans and Doctors can qualify for a loan with $0 down, as well. With costs of renting rising in the Houston area despite low oil prices, this is one of the best ways to create a solid long term investment, one which can yield tax savings as well. When you purchase a home any loan origination fees, interest paid and taxes are deductible on your income tax. 

As an example, a veteran using a VA loan with $0 down, could afford a home of $228,731 with monthly mortgage payments of $1,696. This is on a 30 year loan at an interest rate of 3.95%. If the rates had been hiked yesterday, say to 5%, the same terms would apply for a home costing $210,654.

Another example, anyone applying for a conventional loan with 5% down on a $250,000 home would still pay under $2,000 if they got a loan with a 4.125% APR. This monthly mortgage amount would change to $2,252 if the APR increased to 6%. Of course, both these examples would vary depending on HOA fees, and specific tax rates. 

There's never been a better time than the present. If I can assist you in any way with your decision to buy a home feel free to reach out to me!