Melbourne Real Estate News, Brevard County FL Real Estate by Sandy Shores REALTOR®

Back to the same old question, Where is the market going?  Should I buy now or wait?  Ask 20 people…you’ll get 20 different answers. We know that millions of dollars have been lost in the economy in all sectors.  Interest rates change almost everyday.  These rate fluctuations can affect how much you can borrow and how much your monthly mortgage payments on a home will be.  Many economic and political factors affect rates, and sometimes the experts don’t know why rates perform as they do.  Sometimes rates can rise even when the Federal Reserve cuts short term bank rates.  The Fed cut the Fed funds rates by ¾ of a percentage point in March 2008. This cut the fed funds rate to 2.25% - the lowest since 2004.  This is the 6^th rate cut since September 2007.   Normally, banks in turn would immediately cut the rates at which they lend money to homebuyers and companies for personal and commercial use.  But, in the past few months banks have made 3 changes to their usual practice: 1) They have not been passing all of their interest rates savings to customers.  2) They have restricted lending only to the most creditworthy, documented applicants. 3) They have cut the total amount they’re willing to lend.  Banks are taking these seemingly ridiculous steps in an attempt to somehow reverse the effects of the massive losses withstood for lending to customers with lousy credit in the past 5 years. But, will mortgage rates and credit card rates still go down relative to the rate cut? No one knows for sure, we’ll have to wait and see.   So, back to the same old question everyone is still asking, Is it time to buy? Well, let's consider this...as the recession ends...and no one knows for sure when that may be, interest rates typically head back up again.  On a $200,000 loan an increase from 6% to 7% can cost $47,340 over the term of the loan, and an additional $131 per month.  Hmmm! That's food for thought!                                                           www.sandyshoreshomes.com