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New Jersey Home Mortgage Interest Rates Falling
By admin | December 17, 2008
I am sure many of you have heard the news, that the Federal Reserve has lowered interest rates once again. This time that basically came out and admitted that the housing slump is the root of the economic trouble in the country right now. The Fed came out and said that they are going to do what ever it takes to stabilize real estate prices.
How are they going to do that? Well they already lowered the rate that banks charge each other for over night loans to about 0% so they really cannot lower interest rates any more, or can they? Yes they can actually! They are going to start buying mortgage backed securities, the bundled mortgages that home buyers take out when the purchase New Jersey homes and homes across the county.
What will that do though? Just like with government and corporate bonds, the higher the price that a buyer is willing to pay the lower the interest rate. If the Fed starts buying up a significant number of mortgage backed securities, the price for them will start going up and the banks will have lots more money to lend at competitive interest rates.
I know this is long and kind of boring but here is the good part. The mortgage payment on a $400,000 mortgage at 5.25% is $2208.81but you take the interest rate down to 4.5% which is quite possible and that payment drops to $2026.74 a significant savings.
I have a feeling that there is going to be a fairly busy spring real estate market, how do I know? I am currently working with more New Jersey home buyers here in December than in all of October and November combined.
Considering purchasing a Northern New Jersey home? Check out the best online home search in the area, the Morris Essex and Union County MLS Real Estate Search. There you can find every Morris Essex & Union County home listed for sale in the MLS.
James Boyer
NJ REALTOR
RE/MAX Properties Unlimited
973-539-6300 Office
973-647-0253 Direct
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