Category Archives: Interest Rates

We have seen a nice drop in rates over the last few weeks or so, roughly 0.375% on 30 year fixed rate Conforming loans (up to $417,000) and 30 year fixed rate High Balance Conforming loans ($417,001 to $697,500 in San Diego County). This drop equates to an increase in buying power and an increase in buying options.

Increased buying power, two examples:

· A payment of $2,112 at 4.875% equated to a loan amount of $399,050. Same payment but at 4.50% equates to a loan amount of $417,000. Price range increase of $17,950.

· A payment of $3,638 at 5.125% equated to a loan amount of $668,150. Same payment but at 4.75% equates to a loan amount of $697,500. Price range increase of $29,350.

Increased buying options:

Let’s say you were already going to borrow $417,000 or $697,500. The recent reduction in interest rates would lower your payments by $95 at $417,000 and almost $160 at $697,500. This loan payment reduction might now allow you to look at communities with amenities such as a community pool, tot lot/playground, and common ground landscaping; amenities that many families are looking for but were unable to afford due to the $50 to $100 additional Homeowner’s Association (HOA) fee. The lower mortgage payment now leaves room for that HOA fee. This gives you more properties from which to choose.

Are lender’s guidelines stricter now than a few years ago? Yes, of course. However, buying opportunities are still abound. The real question is: Are you ready to take advantage of this market? As author Paul Fargis once said, “Luck is when preparation meets opportunity.” Be lucky. Be prepared. Get pre-approved today, and be ready to take advantage of that opportunity when it comes around.