Tuesday, January 10, 2012

Mortgage Update

Mortgage Update

The week of January 9, 2012 

This week, rates had minor changes from December:  The zero point 30 year fixed conventional rate inched toward 3.875%, spending most of the week at 4%, while the 15 year rate continues to hold at 3.25%.  The FHA/VA 30 year rate continued to hold at 3.875%., while the 10 and 7 year ARM rates fell.

Adjustable Rate Mortgage rates in review:   

•    10/1 ARM reached 3.375% - 3.25%
•    7/1 ARM reached 2.875%
•    5/1 ARM reached 2.75%

We continue to recommend that borrowers lock….or cautiously float!

Is it better to purchase than rent?

barrington-1
8723 Barrington, Superior Township MI 48198
Let’s use the listing at 8723 Barrington, Ypsilanti, MI  48198, as an example.

If one were to rent this home, they would expect to pay $1500 - $1600 per month, while the payment for an FHA, 30 year fixed mortgage would be $1024*. 

There are other financial benefits to purchasing:

If you were to pay live in the above referenced home for 10 years, you will have reduced your mortgage balance to about $99,000, making your equity position $24,900.  If the property appreciates just 2% per year, you will have gain additional equity of $35,100, for a total of $60,000. 

Your tax savings, over 10 years, at 28% would be an additional $23,000. 

You can copy and paste this link, which takes you to the Ginnie Mae website, and obtain calculations for other purchase prices:    http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?Section=YPTH

Rates are at some of the lowest levels in history and home prices are very affordable, making this the perfect time to purchase a home. 

You may ask yourself if home prices will continue to decline.  No one knows the answer to that question but, historically, prices rise after a period of decline.  Consider the

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