California's Real Estate Market The united States have been greatly affected by the economic crisis and the state of California is no exception. California is one of the most expensive places to live in America and property in California has always been first class. Getting a mortgage for buying a home is barely troublesome because of the increase in value of land in California whether they are developed or undeveloped. A credit worthy buyer can purchase a home with most of the price funded by loan. Since the housing market is unpredictable due to the decline of real estate values, the slowdown of credit gives a financial opportunity to the homeowner to refinance their loan.
Low Prime Rates Despite of the drastic effect done by the economic crisis, the Federal Reserve decreased interest rate to record lows. The "prime rate" is the rate that banks lend to each other and serves as a basis for the interest rates of loans available to all consumers. The current prime rate is 3.25 - the lowest since August of 1955. The low interest rate opens the opportunity for the California home owner to refinance their property. However this opportunity will not last long even if the interest rates dropped steadily for the past two years already. Change will be expected at any given time.
The Current Trend in California Home Sales While home sales in California decreased slightly, less than one per cent, from January to February of 2009, in February 2009 nearly forty-three percent (43%) more homes were sold than in February 2008. Additionally, the ten-month trend of falling home prices came to an end in February. Home equity is on the rise; interest rates are projected to increase as a result of President Barack Obama's economic stimulus. Furthermore, Treasury Secretary Tim Geithner's proposed economic reforms suggest the favorable climate for the home owner to refinance their mortgage is likely to change.
A Final Consideration When Refinancing: Flexibility The final reason the savvy California homeowner should refinance their home loan is the opportunity not only to reduce the amount of the monthly mortgage payment, but also to increase the amortization period of the loan itself. While on the surface this may seem unsound financial strategy, the most overlooked consideration of personal financial management is the time value of money.
This heightens the time value of money since a lower monthly mortgage gives the home owner a chance to invest in more profitable assets or to simply have more money to spend.
Low Prime Rates Despite of the drastic effect done by the economic crisis, the Federal Reserve decreased interest rate to record lows. The "prime rate" is the rate that banks lend to each other and serves as a basis for the interest rates of loans available to all consumers. The current prime rate is 3.25 - the lowest since August of 1955. The low interest rate opens the opportunity for the California home owner to refinance their property. However this opportunity will not last long even if the interest rates dropped steadily for the past two years already. Change will be expected at any given time.
The Current Trend in California Home Sales While home sales in California decreased slightly, less than one per cent, from January to February of 2009, in February 2009 nearly forty-three percent (43%) more homes were sold than in February 2008. Additionally, the ten-month trend of falling home prices came to an end in February. Home equity is on the rise; interest rates are projected to increase as a result of President Barack Obama's economic stimulus. Furthermore, Treasury Secretary Tim Geithner's proposed economic reforms suggest the favorable climate for the home owner to refinance their mortgage is likely to change.
A Final Consideration When Refinancing: Flexibility The final reason the savvy California homeowner should refinance their home loan is the opportunity not only to reduce the amount of the monthly mortgage payment, but also to increase the amortization period of the loan itself. While on the surface this may seem unsound financial strategy, the most overlooked consideration of personal financial management is the time value of money.
This heightens the time value of money since a lower monthly mortgage gives the home owner a chance to invest in more profitable assets or to simply have more money to spend.
0 comments:
Post a Comment