Blog :: 01-2008

Fed cuts rates and mortgage interest rises

The following information is provided by a local mortgage broker in our area:
You may have noted the endless news stories regarding rates being down due to the recent and pending 'Fed cuts'. Unfortunately, but not surprisingly, the press often misrepresents the facts regarding how Fed cuts effect mortgage rates. Here is the way things really work: Fed cuts and mortgage rates are not directly related. In fact, when the Fed cuts short term rates, mortgage ratesfrequently spike as stocks oftenrally on the news (pulling money from bonds and mortgage backed securities). Aggressive cuts can also spark the fear of inflation which eats away at thevalue of bonds(pushing rates even higher). The Fed rate cuts directly effect the Prime rate only. The Prime rate is the short term rate that most home equity lines and credit cardrates are tied to. Long story short, mortgage rates are volatile but have been up a bit recently due to the fed cuts and the proposed 'stimulus' package.

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    Five Thousand Saved and Forty Thousand Lost

    I was talking to a client the other day, and he was telling me a story about how he tried to buy an investment property years ago from a for sale by owner.He told me that he found a building that was in good condition, a decent location, and the numbers on it looked pretty good. He made a couple of offers on it, up to within $5,000 of what the owner said he would take. They were at a stalemate and neither party was going to budge, so the deal didn't go together. A year later he went back to the owner of the property and gave him his same final offer. The owner was still not willing to budge. A few weeks passed and the owner of the building sold his property to a buddy of the buyer at his price which was only $5,000 higher than what the original buyer ever offered. Fourteen months passed and the second buyer sold the building again for $40,000 more than what he paid for the property. So by not increasing his offer, the original buyer saved $5,000 but lost $40,000. When negotiating on real estate, take a look at the big picture. Sometimes it is better to take a look down the road and not what is just in front of you. My client has decided that he has learned an expensive lesson and no longer wants to go down that road alone. By the way, we just helped him make $60,000 on the sale of an investment property.

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      Why Century 21 Advantage ?

      We engage one-on-one consulting with proven results. We use state of the art resources for client convenience. We achieve maximum exposure when selling your home. We use advanced technology for lead generation and follow up. We track our marketing avenues and utilize the most effective resources to reach out and touch people. We have leading-edge training and development for our agents. We are the standard for real estate professionals. Most of all, because we careMORE about you and your family.

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        Realtor Code Of Ethics

        The best way to increase our business is by providing outstanding service in a competitive real estate market. No big surprise there. But most consumers are unaware that Realtors abide by a code of Ethics outlined by the National Association of Realtors. In fact they provide a handbook by which all Realtors adhere to and is the benchmark for the foundation of cooperation among the Realtors. It is what separates us from all others. Additionally, every four years Realtors are required to take a mandatory ethics training course to review all the rules and regulations that guide them in their daily professional practices.

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          The Interest Rate Game

          Interest rates change constantly. Some days they are up and some days they are down. When I started selling real estate in 1984 interest rates were in the 14% range. That's right 14%. Do you remember how difficult it was to accept that reality. Well, rates are currently down but that will last only so long. When the economy is sluggish people have a tendency to move their money out of the stock market into bonds and mortgage-backed securities. This causes mortgage interest rates to go down. When the economy is doing well, the stock market rallies and the Investors have a tendency to move their money back into the stock market which in turn makes the interest rates go up. It is often difficult to time the market to get the ultimate lowest price in the housing market and that is why it is important to take advantage of the current situation if you are thinking about buying. Interest rates are low and the time is right to purchase your home.

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            The Silence is Loud

            There seems to be a hush over the real estate market that most agents have never heard. That's right, those agents that entered the business in the last 10 years. Their careers were jump started by low interest rates and rapid appreciation. Oh it was never so good, as to be a Realtor in the day. Well the market has changed and with that many perceptions about what has taken place. For the newbies, it seems, the sky is falling. For others, who have been in the business over 20 years, they look at it somewhat matter of factly.They havewelcomed it withalmost open arms. They knew it was inevitable. You seethey have beenhere at least twice before. Yes, this slow down is a bit unique, and yes this slow down does bring different challenges. But at the end of the day,they realize that this market was long overdue. Theypredicted it and prepared for it. Because of this, they embrace the slower pace, the less frenetic days, the additional time to spend withtheir families. They do not mind the silence, the uninterupted dinners, the family time. Now for them the silence is loud and clear, and this too shall pass.

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              who cares if it gets cold

              I often find it amusing when I tell people that I live in Vermont when I am visiting other states and their reaction to it. "But isn't so cold there?" they ask. Of course it is cold at times, but not all the time. We have four great seasons here. Being a native, I am certainly used to all the seasons and the changing weather conditions. We have a saying here, if you don't like the weather, just wait 15 minutes and see what happens. We take advantage of the snow in the winter time being only 35 minutes to what some people consider the ski capital of the East, Stowe, Vermont, and only 25 minutes to a smaller Mountain Bolton Valley. In the fall, we have some of the best foliage one can imagine, combined with lots of soccer and fall baseball and football. In the spring, we enjoy the beauty of our surroundings, baseball, biking and running outdoors.In the summer, we enjoy the lake, the bike paths, hiking and more. We love the outdoors and all the healthy activities that you can enjoy. Yes, sometimes it gets cold, but not enough for us to complain to long. We live in Vermont, deal with the coldand love it here.

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                We can help you.

                We can help you find your perfect home on the lake, in the mountains or in the suburbs. So take a look at the entire inventory and give us a call or email us. We'll make your sale or purchase fun, rewarding and easier than you could imagine.

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                  Is it a good time to buy?

                  According to the statistics provided by the Vermont Real Estate information Network for Chittenden County, there are a number of opportunities for the person looking to buy a home in our wonderful area. Residential listings are up 2.5% for this past December compared to December 2006. Currently there are 740 active listings in Chittenden County compared to 712 last year at this time. Combine that with interest rates that are at a two year low and one would realize that this is the time to purchase your home.

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