The Best Things Come in Twos

by The Shawn Team

Hello and Happy Almost-Fall!

This is the time of year when Central Valley peeps show 2 things: Hope and Determination.

We hope the weather will get a little cooler.

We are determined to tell summer that it doesn’t have to go home, but it’s time to move on out of here.

We put up our fall decorations months before the leaves change, hoping those beautiful colors will get here sooner.

We are determined to dress for fall, so we wear turtleneck sweaters while still needing sunscreen.

BUT-

What I’m REALLY excited to talk to you about is the announcement coming next week about the lowering of interest rates!

You may have been hearing things like:

“The top market focus this week will be speculation on whether the Fed will announce a cut of 25 or 50 basis points on September 18th. The markets are currently estimating a 28% chance of a 50 basis point cut.”

Or you may have heard:

“The August CPI inflation reportwill come out this Wednesday and the markets are expecting to see a 0.2% monthly increase in prices, leading to a 3.2% annual Core CPI inflation, and a 2.6% annual total CPI inflation.”

But what does it really mean for buyers and sellers?

What A Lower Interest Rate Means for Buyers

Buyers, a lower interest rate means 2 possibilities for you: a lower monthly mortgage payment or being able to afford a more expensive home. Let me show you how this works.

Let’s say that you are interested in buying a home. You go onto The Shawn Team app, put in what you’re looking for, and see some amazing homes. One great feature on the app is the mortgage calculator that's built right onto the same page as the listing information. So as you're looking at the home features, pictures and price, you can get an idea of what your monthly payments would be on the house you’re interested in.

The Breakdown

Let's look at the maths. We will compare a 6.5% interest rate with a 6% interest rate. This will show how a .5% drop in rate can affect pricing. (Your interest rates and pricing may vary. Your lender will be able to help you determine what your rate will be.)

Option 1: Lower Monthly Payment

First, we will see the difference in monthly mortgage payment with a reduced interest rate and the home price being the same.

6.5% Interest Rate (Average current rate)

Home Price: $475,000

Monthly Payment: $2,798

6% Interest Rate (reduced by .5%)

Home Price: $475,000

Monthly Payment: $2,674

This is a savings of $124 per month!

Option 2: More Home

A reduced interest rate can also give you the option of affording a more expensive home while keeping your monthly payment the same.

6.5% Interest Rate

Home Price: $475,000

Monthly Payment: $2,798

6% Interest Rate

Home Price: $491,000

Monthly Payment: $2,797

This increases your affordability by $16,000!

What A Lower Interest Rate Means for Sellers

Here are 2 great benefits for Sellers with the lowering of interest rates:

Benefit 1: More Buyers

Your pool of qualified buyers would increase! Using the above scenario, Buyers who had their limit at $475,000 can now raise it to $491,000. More buyers means more offers and the possibility of better offers.

Benefit 2: More Money in Your Pocket

Because buyers will be able to afford more home, you may also be able to list your home for a higher price without affecting the buyer's monthly payment.

What's Next?

Enjoy the season we are in, while looking forward to more good things to come. One thing is for sure- lower interest rates are going to be good for everyone!

Take Care Friends,

Have you downloaded our app yet? Find it here on Google Play and iTunes!

This Market Update and similar such communications are for informational purposes only and are based on publicly available information. These materials are general communications, which are not impartial, and are provided solely for discussion purposes, and not in connection with any product or service offering. The opinions and views expressed in this Market Update are as of the date of this communication and are subject to change. Any forward-looking views and statements contained in this Market Update are based on current estimates or expectations of future events or results. Actual results may differ materially from those described in this Market Update. The views expressed in this communication should not be attributed to Guild Mortgage Company as a whole and may not be reflected in the strategies and products offered by Guild Mortgage Company.