Strike while the iron is hot! If you’d like your own Colorado horse property, Denver Colorado real estate in the suburbs of Littleton, Englewood, Parker, Highlands Ranch, an urban loft or commercial real estate in Downtown Denver, listen up. Today’s great interest rates may not get any hotter.
Although the Fed loudly announced that their buying program of Mortgage Backed Securities is going strong, we cannot assume that interest rates will drop any lower or even remain where they are throughout the summer of 2009.
Lori Richardson, Vice President of Cherry Creek Mortgage Company in Greenwood Village Colorado reveals why. Her e-bulletin dated February 4, 2009 explains that the Fed is buying FNMA 30-year 5.5 percent and 5.0 percent bonds. These bonds represent outstanding mortgages with rates of 6.0 percent to 6.5 percent. These loans are being refinanced at today’s low interest rates. The Fed says they can continue this throughout June 2009.
Richardson goes on to say that many pools of the FMNA 5.5-percent pools will be refinanced and paid in full, giving the Fed an immediate return on investment. Now the catch. After the initial influx of cash from the refinanced loans, the wheels may slow down to school zone speeds. Money will then go back to trickling in from the loans originated at today’s low rates.
That is because the monthly payments on the low-interest-rate mortgage products that are currently being used to refinance are a far cry from the large sums of money going to the Fed when the higher-interest-rate Mortgage Backed Securities are being paid in full right now by homeowners who are refinancing.
The question becomes, what will they do then? Most likely, interest rates will start edging back up.
And how does that affect buyers? Richardson suggests that after the initial money flow slows down, “rates could turn higher and this window of opportunity could pass them by entirely.” That is the reason she warns, “If you snooze, you may lose.” Waiting for possible lower interest rates to come along could cost hundreds or thousands of dollars in monthly payments.
For more information about farms, horse properties, and real estate in the greater metro area, call Michael Paul of Realty Oasis at (303) 268-6052.
