According to Key Savings Bank a 30 year fixed rate mortgage is down to 4.275%.

How does a lower interest rate translate into more buying power for you?

$100,000 mortgage at 4.275% = $493.40 payment

$100,000 mortgage at 5.275% = $553.75 payment

Not only does a lower interest rate mean a lower payment, but it also means an increase in your buying power.  Purchasing a new home with a 4.275% rate allows you to purchase a home for $112,000 for the same payment as a $100,000 home with a 5.275% rate.

INCREASING your buying power by 11%!

No matter what your goal, a low rate means only good things for you.

The question that everyone wants to know is: What’s the next move for interest rates? Higher or lower?

The answer is–we don’t know. What we do know is rates will go up faster than they fall.

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The average rate for a fixed 30-year mortgage shrunk to 4.69% last week.

If you have the Big 3:

1. Job Security
2. High Credit Score and
3. Cash

You can qualify and secure a loan that will save you thousands of dollars over the entire term of the loan.

Did you know that a 1% decrease in a mortgage rate can increase your purchase power by 10%? So for a loan of $100,000 you can increase your purchase price by $10,000…for a $200,000 loan you can increase your maximum price by $20,000…all for the same monthly payment as your neighbor with the less expensive home than yours.

Along with a lower interest rate remember that home prices have been stagnent the past few years too. Leaving you with the ability to purchase a “better” home for the same amount of money as you would have in 2007.

Starting the buying process is as easy as contacting your favorite Wisconsin Rapids Realtor and meeting with a lender to get pre-approved and lock in this especially low interest rate.

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Which means that if you’re able to pay your January 2010 mortgage payment before the end of December you’ll be able to increase your 2009 tax deductions. And that’s always a good thing.

Paula Henry who sells Indianapolis real estate wrote a timely post reminding everyone of this.

She also states that:

This time of year, it’s easier for some to postpone their mortgage payment until after the holidays. By paying in 2009, the mortgage interest paid can be applied against 2009’s itemized tax deductions even though the payment isn’t technically due until 2010.

In the end you’re paying it anyway… I know the holidays make it difficult. Plus, property taxes are due. In my case, I’m not escrowing enough per month; so I have an extra $400 I need to come up with in the next couple of weeks…

But, if you’re able, by pre-paying you’re guaranteeing that the tax-man will leave a little more in your stocking come April 15, 2010.

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As you begin to research mortgage information take note of the following four tips:

1. Some lenders are requiring more information. This can cause banks to take longer to approve your loan. Make sure you know how long each bank will need to approve your loan. My suggestion: start your loan search early in your home buying process…
2. To land the best rates you’ll usually need at least 20% down and a credit score of 720 or better. Remember, you get one free credit report per year from each of the big three (TransUnion, Experian, and Equifax).
3. To qualify for a mortgage, your total debt should be less than 43% of your pretax income.
4. Your home debt (monthly mortgage, insurance and taxes) should be less than 31% of your pretax income.

What next?

Like what you’ve read? Why not subscribe and stay current with Wisconsin Rapids real estate?

Have a minute or two? Search all area homes for sale.

Thinking of selling? Find out how much your home is worth.

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As foreclosures have increased numerous strategies have been put in place to help limit the number of homes that ultimately end up in foreclosure including:

• agreements with the lender
• temporary forbearance
• loan modification
• short sale

Still, many Wisconsin homeowners are unable to stop the foreclosure process causing the number of foreclosure filings in the state to rise 21.4% from 2007 to 2008. This is the second consecutive year with a 20% plus increase.

Area Foreclosure Results

Wood county saw an increase of 45% in the number foreclosure filings in 2008. The total number of homes increased from 143 in 2007 to 207 in 2008. But we are not the county with the largest increase…

Adams county had the largest increase of any Wisconsin county, increasing  80% to a total of 222 homes in 2008. In central Wisconsin Juneau county increased the least by only going up 4%.

Overall, only 6 of 71 counties (Portage did not report) saw their number of foreclosures decrease or stay the same. Eighteen counties saw an increase of 30% or more.

This past weekend I heard that 45% of Americans are worried about making their next mortgage payment.

You can see a breakdown by county by clicking here.

It is my sincerest hope that none of you have to experience a foreclosure, either personally or through a friend or family member. If you see yourself falling behind please be proactive and seek help early. 

Special Note: If you need assistance, or just want to know where to start, please get in touch. I have many contacts in the Wisconsin Rapids area and would be happy to help you find the help you need.

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Now that Wisconsin Rapids mortgage rates are the lowest they’ve been in years refinancing your Wisconsin Rapids home may be in your best interest.

The US Government has made it clear that they will do what they can to keep our economy moving forwards (or attempt to get it moving forwards…) — and keeping mortgage rates low is a key ingredient.

If you’re a Wisconsin Rapids homeowner locked into a higher adjustable rate mortgage or even a conventional fixed-rate mortgage this may be your best opportunity to refinance into a lower rate.

Refinancing your mortgage involves paying off your old mortgage with the proceeds from your new mortgage.

Why Refinance Your Wisconsin Rapids Home Loan?

Wisconsin Rapids home owners refinance their home for many reasons. Many want to use equity to pay expenses including credit cards, college expenses, home repairs etc. Another popular tactic is to simply keep the equity in your home which will lower your new mortgage payment.

Another reason to refinance is to improve the terms of your current loan. Change your 15 year mortgage loan into a 30 year home loan or vice-versa.

When is refinancing in your best interest?

1. Any time you can lower your interest rate by more than 1% your mortgage is an excellent candidate to be refinanced. Over time you’ll likely come out ahead.
2. In order to receive the lowest rates many lenders will require you have at least 20% equity in your home.
3. You don’t need a jumbo loan. Rates haven’t come down much for loans greater than $417,000 so refinancing isn’t in your best interest.

Your next step is to contact your mortgage lender today to lock in your better rate.

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A pre-qualification letter is an unverified, free test run of the loan application process. The lender will use your income, monthly debts, credit history and asset information as well as electronic credit reporting to verify your credit worthiness and estimate what you can afford for a mortgage payment.

A pre-approval letter is a firmer commitment by the mortgage lender based upon a complete application with a fee, credit check and employment verification.

A pre-approval letter says that a mortgage loan is approved for a certain amount of money for a certain amount of time, which is subject to an appraisal of the property.

If a pre-approval letter is required in your offer to purchase, the offer should clearly state what is needed and in what form. Because a pre-approval letter might be mistaken for a loan commitment, which will waive your financing contingency, your lender should indicate in your pre-approval letter that it is not a loan commitment.

You can see their are 3 levels that you’ll go through to complete the purchase of your next Wisconsin Rapids home.

First, a pre-qualification letter lets you know where you stand and is a guideline you can use to know how much home you can afford.

Next, a pre-approval letter is a more thorough evaluation of your credit and income. The pre-approval letter is guaranteed for a specific amount of time for up to a specific dollar amount and interest rate.

Lastly, a loan committment signifies that the financing contingency has been met and that financing will not hold up the closing on your new home.

Thanks to Wisconsin Real Estate Magazine

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The Federal Reserve continues to try and boost the national housing crisis. Mortgage rates on Thursday fell to a 37 year low. Average rates on a 30-year fixed rate mortgage rate declined to 5.19% down from the previous low of 5.47%.

The government’s aim in these debt purchase programs is to bolster the mortgage market, free up lenders to make new and lower-rate loans and stimulate the worst housing market since the Great Depression.

Mortgage rates should stay low and we will stay below 6 percent throughout much if 2009 as the Fed continues to pour money into mortgage-backed debt with the goal of keeping mortgage rates low.

In the previous two months 30-year fixed rate mortgage rates have fallen more than 1% and it appears like rates will “continue to remain low for the majority of 2009 as well” said HSH vice president Keith Gumbinger.

My intial thoughts:

• Now is an excellent time to buy. Wisconsin Rapids home prices are very reasonable and their are many different homes to choose from (no matter your price range).
• This is also the time to refinance.
• If you think you’ll be selling your current residence in the next couple of years, you should seriously consider selling now. 

Why sell now?

At some point interest rates will rise again. Lets say mortgage rates eventually climb back to 6.25%. The payments on a $150,000 mortgage would be:

• 5.19% = $822.74 per month
• 6.25% = $923.58 per month

As mortgage rates climb back to “normal” your mortgage payment will have gone up over $100 per month for the same loan.

What that means is you may not be able to afford a $150,000 mortgage at the higher interest rate. In order to keep your mortgage payments the same, in two years you’ll be purchasing a home worth less than your current home.

At an interest rate of 6.25% a $133,500 mortgage will equal your payment on a $150,000 mortgage at 5.19%.

In essence you’re losing over $16,000 in buying power when mortgage rates go back up. This will cause less homes to be on the market as well as less people who are willing to buy, especially if they take advantage of today’s low interest rates.

Read this for more information on how dropping interest rates will affect your buying power.

Click here to see a graph detailing interest rates since 1971.

Update: interest rates did hit 4.5% last week, for all of an hour…

Sources: Home Loan Rate Flat After Fed Cut and Headed Lower and Yahoo! News

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The Wisconsin Department of Veterans Affairs is currently offering a 30 year fixed mortgage at a rate of 5.875% to any qualifying Wisconsin veteran. Only a 5% down payment is needed and their is no private mortgage insurance (PMI) requirement. Click here to see what your payments would be.

There are no income limits for this program and the maximum mortgage amount is $385,000.

To obtain the required Certificate of Eligibility to participate in the home loan program, veterans should contact their local County Veterans Service Officer.

For further information about WEVA loan programs click here to visit their web site or call (800) 947-8387.

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Here are current Wisconsin Rapids mortgage rates:

• 30 year fixed rate — 6.125%
• 15 year fixed rate — 5.875%
• Jumbo 30 year — 7.12%
• FHA 30 year — 6.5%
• 3/1 ARM — 4.607%
• 5/1 ARM — 5.548%

Are you a first-time home buyer? Remember, if you purchase your first home between now and July 1, 2009 you’re eligible for up to a $7500 tax credit. Click here to learn more.

Ready to start looking for your next Wisconsin Rapids home? Click here to get in touch. Now is an excellent time to buy your next home. High inventory… Winter approaching… Antsy homeowners…

Stay up to date on the current Wisconsin Rapids real estate market here. Ready to sell? See what your home is worth by filling out this short form.

Related posts:

• Marketing your home. Everyone is not created equal.
• Buying a home in Wisconsin Rapids. A beginners guide.
• 75 tips to survive a down economy.

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