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Soon To Be Homeowners and Refinancers Dodge a Bullet

indexIf you followed the news yesterday, you were bound to hear about the Fed’s decision to NOT raise interest rates. This news was heavily anticipated by many anxious investors, banks, and business owners. The reviews on their decision have been mixed. The stock markets around the world did not respond kindly, but borrowers were relieved to know they can still receive loans at historically low interest rates.

The Fed has kept their benchmark interest rates, the rate at which lending institutions borrow from one another, around 0% – 0.25% since December 2008. This low rate has been a key factor in helping the US economy recover from one of the worst financial disasters in history. Now that the economy has largely recovered and several key sectors are strong again, many experts think the Fed will raise interest rates this year.

Here is what a few analysts from Morgan Stanley are saying.

“At the conclusion of its September 16-17 meeting the Committee took a pass on raising rates, as expected, and crafted a surprisingly dovish statement. The result was not the hawkish pass we had expected, nor was it the dovish pass our rates strategists saw as a risk, but somewhere perfectly balanced in between.”

“A 2015 rate hike remains in play as Chair Yellen underscored that most participants still see a rate hike this year as appropriate, but by no means is a 2015 hike a foregone conclusion.”

What does this mean for the home loan borrower?

If you are looking to buy a home or refinance one, it means that you still have a little bit of time to lock down a loan at a historically low interest rate. While a rate increase is eminent, it doesn’t mean that rates will automatically shoot through the roof. However, even a small rate increase can mean a lot of money over the course of a 30 year loan.

Take for example the difference between a 3.90%, current low end rate as presented by, interest rate and a 4.50% interest rate on a 30 year term. It doesn’t sound like a lot but, over the course of the loan it’s roughly a $31,000 difference.

And if you can pay a little more each month, you can really get a good rate right now on a 15 year loan. Those loans are currently hovering around 3.01%

If you are on the fence about whether or not to buy a home, let us show you all the reasons home ownership makes sense in this current economic environment. Schedule your appointment with us today!



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