February 7, 2008 Newsletter
This is the second issue of the Colony Title Newsletter, and from the response it seems everyone appreciates some good news. So here goes.
Interest rates. Based on our experience and discussing the market with several lenders our feeling is we are at or near the bottom as far as fixed first mortgage rates. As of the date of this writing (February 7) rates have fluctuated between 5.75 and 5.375 and will settle somewhere in that range. If you are contemplating a refi or a purchase and are waiting for a more pronounced drop, you should stop waiting. Even when the Fed lending rate was at 1.00 percent (the rates the banks borrow from the Federal government) interest rates never got below 4.5%. With the current Federal lending rate to banks at 3.00, the banks need to make a spread between that and what they lend to their borrowers. Adjustable rate mortgages may be slightly better, but it looks like a mid 5 percent market for fixed rates. If you need lender recommendations, call or email us.
Investment opportunities. With sellers being more realistic it’s a perfect time to buy. Right now there are tremendous deals to be had in Ocean City, especially buying from developers who have overbuilt.
Other investment ideas. Fractional shares. What has started out slow has become a unique way to buy a resort or recreational home without bearing the entire risk of renting and or carrying the property. In fractional ownership, 4 or more investors own the property, and divide up the use based on your percentage of ownership. Would you rather own one fourth of a million dollar vacation home you are only going to use some of the time or 100% of a 250,000.00 condo in the same location? As opposed to a time share where it’s virtually impossible to make any money on the ownership, the owners of fractional shares receive the value as the property appreciates. It depends on your goals and lifestyle, but if you have an interest email me at firstname.lastname@example.org for more information.
There is a new mortgage product whereby you have an equity line of credit instead of a traditional mortgage and you actually have an account set up where your paychecks are deposited. You write checks out of the account to pay your normal bills, but all the time your money is in the account it reduces the amount of interest paid on the mortgage as interest accrues on the outstanding balance. While this mortgage is not for everyone and it takes some discipline, you can reduce the term of your loan dramatically. If you have an interest, contact me and we will put you in touch with the lenders who are offering this product.
As always, we want to be your legal advisers and title company for all your real estate needs. If you want to pass this information on to a friend, email us their address and we will add them to our growing list.