Tallahassee Real Estate Blog

At an Open House I was hosting the other day, a couple mentioned to me that they were waiting to buy a home because mortgage rates were sure to fall as the Federal Reserve cut interest rates. 

This highlights a common myth that mortgage rates mirror the Fed's rate actions.  Not true.  30 year mortgage rates are most closely tied to movements of 10 year Treasury Bonds.  Bonds and mortgages are impacted by a variety of factors, including the probability of future inflation.  In fact, there are times where a Fed rate cut will RAISE mortgage rates if investors feel the action will make inflation more likely.  Such could be the case now, where many mortgage analysts think rates will rise in the next 2 months as the economy does show some signs of future price inflation.  

But guessing the direction of future rates is risky business.  If you want to purchase a home, don't try to time the market.  Look for the home that fits your needs, and work with your Realtor to buy at a fair price. 

If you are more concerned about making money in real estate, that's another thing...  find a Realtor that does investment analysis, and buy some investment property - good values can be found!

Whether you are looking for a home or investment property in Tallahassee, call Terance Keenan and his Team - we can help!  850.445.2476!            

I'd like to talk about another mortgage myth currently going around - that ARMs are bad for consumers, and the cause of the subprime mortgage problem.  Not true. 

ARMs can be GREAT loan products for the right situation.  For example, if a homebuyer only expects to own a particular home for about 5 years, a 5/1 ARM could offer significant interest rate savings with little risk.  A 5/1 ARM acts like a fixed rate loan for 5 years, then adjusts on 1 year periods.  Right now, 5/1 ARM rates are about 0.7% BELOW 30-year fixed rate mortgages.  That is a savings of about $75 every month on a typical Tallahassee area home. Over 5 years, that equates to $4,500 in interest savings!  How much gas could that buy you in Tallahassee??  Quite a lot!

What caused trouble for some subprime borrowers were ARMs that started with an artificially low "teaser rate", and drastically adjusted upward within a few months to payment amounts that the borrower could not make... bad advice and predatory practices from the lender, or bad judgment by the borrower. 

In considering any mortgage, it is important to discuss your situation with a trusted real estate professional and reputable mortgage lender.  True professionals will always make sure you hear sound and unbiased advice.  Call Terance Keenan and his Team if you are considering a Tallahassee home purchase - 850.445.2476           

This maybe one of the best times to buy a Tallahassee home in your lifetime.  Mortgage rates are near historic lows... not just compared to the last 3 years, but compared to the last 37 YEARS!!!  Really - there have only been brief periods where rates have been lower since 1971.  See the chart! 

What do low rates mean?  They lower the cost of owning a home.  Coupled with the pause in appreciation rates, you may never see another time like this! Contact us to set up a pre-qualification appointment where you can find out how mortgage costs really are today - no obligation - no hassle!