Interest Rates - What's Happening?

We all want to see what the future holds - if only I knew! However, the consensus from the real estate industry is that mortgage interest rates are going to go up moderately over the next couple of years.

Today's rates are substantially lower than they have been for the past 20 years. The Mortgage Bankers Association predicts that interest rates on 30 fexed rate mortgages will increase gradually to around 6.5 percent by the end of 2005, and to 6.8 percent by the end of 2006. These rates are still extremely low.

Interest Rates Since 1985
1985 12.55%
1986 10.3
1987 8.86
1988 9.75
1989 10.5
1990 10.14
1991 9.37
1992 8.65
1993 7.66
1994 6.92
1995 9.04
1996 7.17
1997 7.92
1998 7.04
1999 6.67
2000 8.49
2001 7.21
2002 6.85
2003 5.65
2004 5.57

The fluctuation in rates is impossible to predict with any success. When the economy cools off, interest rates tend to drop. When the economy is improving and stock prices are rising, interest rates go up as well.

The same investors who invest in the stock market also invest in mortgage-backed securities. They are seeking a balance between high yield and low risk.

Your mortgage interest rate is extremely important in your financial life. If you keep a home for the entire time you pay on a 30-year mortgage, you will probably pay more in interest than you paid for your house. Saving even a few fractions of a point on your interest rate can save you an astounding amount of money on your mortgage.

What's happening in the real estate market?

According to the analysts there is likely to be gentle cooling of the market instead of this past year's raging fire, where Buyers had to act immediately to have a chance of getting a property. Even then Buyers were likely to be competing with other offers.

With the price increases last year, many potential Buyers are finding the homes they want unaffordable, even with adjustable-rate mortgages and other creative financing. Interest-only loans are one of the new hybrids that make payments low while the house appreciates.
There may be some ups and downs to the housing and land markets this year, but these are expected to be small, while the market settles back to a more normal mode. The high-end market is affected first in both upturns and slowdowns, and we may see even a slight lowering of housing prices. The more affordable areas may see continued increases in pricing, as these markets have not reached their peaks yet.

The Seller's market of 2004 may cool a bit, but with a continued strong market, Buyers and Sellers should be able to find a meeting place they find attractive. Vacant land, as well as homes, should continue to be sought after in the coming year, as it is truly a scarce commodity.

Staging Your Home For Sale - Is It Worth The Investment?

For the past three months the average selling price of a staged home was 19% above the listing price while the unstaged home was only 15%. The 4% difference more than paid the staging cost.

Here are the ten secrets fo selling from Marelen Wharmby, a successful home stager:

• Freshen up the home by painting walls a light, neutral color, such as antique white. Lighter colors appeal to a wider range of buyers and make each room look larger.
  
  
• Take a close look at the floor coverings in each room. If you have hardwood floors under the carpet, you will always make money by removing it, even if the floor is not in perfect condition.
  
  
• Allow as much light as possible to enter the room. Open up or remove all draperies, blinds, shades or other window coverings.
  
  
• Removing the clutter of everyday life - all utilitarian items, stacks of paperworks, toiletries, kitchen utensils, electronic equipment and television sets.
  
  
• Remove furniture from each room that does not go with the decor, such as items that stand out too much and items that are worn or of an unappealing color.
  
  
• Place the remaining room furnishings in a way that makes best use of the character of the space. A room should be balanced so that people do not focus on one particular piece of furniture.
  
  
• Now that you've removed the clutter from your home, adding some nice but inexpensive accessories will greatly elevate the perceived value of the home.
  
  
• Clean, clean, clean. Every crevasse within the home should be spotless and gleaming. Even your normal weekly cleaning can not come close to the quality of clean you need.
  
  
• You can't over spend on fresh plants and orchids, elaborate floral arrangements and landscape plants. All these provide a strong addition to the ambience you want to create.
  
  
• Go on vacation! The houses that sell for much higher prices are homes that do not have the slightly disheveled look which comes with showering in the morning and cooking dinner in the evening. Being gone also will lower your level of stress and make the house easier to sell. Think of it this way: Your vacation will actually make you money.