Lennox Scott Says: It’s Time To Make Your Move!
With the news that interest rates on a 30-year fixed *conforming loan have dropped below 5%, J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, feels compelled to alert consumers to the fact that now is an opportune time for them to make their move on a home purchase or refinance.
With the news that interest rates on a 30-year fixed *conforming loan have dropped below 5%, J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, feels compelled to alert consumers to the fact that now is an opportune time for them to make their move on a home purchase or refinance.
“Even with speculation that interest rates could drop further, there’s no guarantee that will happen or that rates will even remain at their current level,” said Scott. “In the recorded history of interest rates, they’ve never dropped this low with the exception of a brief period in 2003.”
Scott adds that homebuyers who are concerned about home prices dropping further need to understand the math, “A 1% drop in interest rates is equal to a 10% savings in the sales price of a home.” As an example, the following illustrates the savings a homebuyer would assume with today’s interest rate compared to interest rates from only a few weeks ago:
|
Scenario 1 |
Scenario 2 |
||
| Sales Price | $400,000 | $400,000 | |
| Down Payment % | 10% | 10% | |
| Loan Amount | 360,000 | 360,000 | |
| Interest Rate | **5.875% | **4.875% | |
| Payment | $2,129.54 | $1,905.15 |
“This chart demonstrates that today’s interest rates increases a homebuyer’s purchasing power by 10%,” said Scott. “This fact combined with the ample inventory of high-quality homes for sale makes this the ideal time to make your move on a home purchase.”
Scott also wants homeowners to know that lower rates provide advantageous opportunities for homeowners to significantly reduce their monthly payment by refinancing. To support this statement, Scott adds that he himself is going to refinance his own home based on today’s drop in interest rates.
Scott says that there are misconceptions about what it takes to qualify for a mortgage, “Contrary to what you may have heard, you don’t need perfect credit, a large down payment, or a large amount of home equity to qualify for a low interest loan. Loans still exist for the majority of people looking to purchase or refinance.”
Erik Hand, president of Response Mortgage Services (John L. Scott’s in-house lender), stated that his company has already seen an up-tick in loan applications for both home purchases and refinances and expects today’s drop in interest rates to continue to cause an increase in sales activity.
To speak with J. Lennox Scott or Erik Hand please call 206-230-7627 or email shelleyro@johnlscott.com.
*Home purchases with a loan amount of $506,000 or less qualify for conforming loans
**Represents a one point buy down; information provided by Response Mortgage Services
While the current interest rates can make it favorable for many to refinance loans (especially if they are on an ARM or have an upcoming balloon payment), I question the suggestion that now is a good time to buy a home. Then again, is there ever a time when someone isn’t promoting it as the best time ever? After awhile and with so many hurting, it’s not so credible.
Buying a home has always been the best way to build “long-term” wealth for the average person. The key to the equation here is a combination of historically low interest rates and very competitive home prices, which is a rare combination. The low interest rate benefits the buyer more, the longer they live in the home (remember the double digit home interest rates in the 80′s? –I do!) Without going into the topic of investment property, the people who are in the best position to use this climate to their advantage are those with a good payment history who plan to live in the home for at least seven years.
Vicki Benkenstein,
Realtor
redballoonagent.com
[...] John L. Scott Real Estate) says it’s time to make your move. You can find his comments at http://eastsidebubble.com/2008/12/11/lennox-scott-says-it%E2%80%99s-time-to-make-your-move/ I agree – Buying a home has always been the best way to build “long-term” wealth for [...]