Rates seem to be starting a new paradigm in that we’re now in a period where rates are likely going to start declining. Anyone who was looking to buy a home and had problems with qualifying is now going to find that it might be a little bit easier to qualify. Those folks should definitely keep an eye on rates and start inquiring sooner rather than later, whether that be with a patrolman credit union or another trusted financial institution.
As far as the purchase market is concerned, there’s still an inventory issue. Certain areas of our country may start seeing more properties become available but that is far from guaranteed. However, the market will adapt and you might see lower real estate prices as well. That combined with the interest rate environment could create a bit of an opportunity for some buyers.
There also may be an opportunity for others to refinance. If you obtained a police home loan at the top of the mortgage-rate market because you had a need to move into a new home, this would be a good time to speak with us at Police Mortgage again.
If you’re thinking about refinancing because you have a higher rate loan, it’s never a problem to inquire and get a preliminary rate quote. I’ve always said that a good deal is what a person feels is a good deal.
For example, if I have a mortgage at a 7% interest rate with a $300,000 mortgage balance and someone offers me 5.99%, do I really want to wait until rates drop to 5.75%? Am I willing to risk rates going back up a little bit to miss the opportunity to get below 6%? If rates are 1% lower or more from your original mortgage rate, then you probably need to seriously look at the possibility of refinancing.
For those who are borderline, i.e. holding a mortgage with a rate above 6%, they may have to wait before refinancing makes sense. In that case, you may have to wait for 30-year fixed-rate mortgages to hit 5.5%. We may not be that far away from that.
If you have been thinking about buying a home recently, and you want to re-explore the possibilities because you heard that rates have dropped, then definitely do that. Also, generally speaking, there are usually better deals in the real estate market in the fall. It never hurts to look. It never hurts to go back out and shop again.
I do think that the spring home-buyer market in 2025 could see some real-estate price decline. There may be some deals to be had, particularly if the Fed is making a decision to continue to lower rates. They seem to be doing so in anticipation of the economy slowing down. Recessionary concerns tend to favor lower interest rates.
Now is the time to contact a mortgage professional concerning home loans for police officers, preferably us at Police Mortgage. Find out what the rates are and try to figure out if buying a new home or refinancing your current loan makes sense for you. The numbers don’t lie.
There are a number of people who have currently FHA loans and VA loans. The pricing on FHA and VA transactions are actually a bit more aggressive than conventional mortgage rates right now. It is possible to get a lower rate for an FHA loan. So, if you currently have an FHA loan you will want to explore seeing what those rates are.
The Fed cut affects all mortgage rates in some way, shape, or form. A decline in mortgage rates will probably take the adjustable rate mortgage out of the situation for most buyers. That is a positive because now we’re not having to talk to people about making a short-term decision with another step left in the form of eventually refinancing to a fixed-rate loan.
Those currently holding adjustable-rate mortgages may very well want to talk to a professional, whether it be at a Chicago police credit union or their local financial institution. For example, say someone has an adjustable-rate mortgage around 5.5%. While we could be potentially raising the payment slightly by going to a 30-year fixed, we would be giving the client more certainty.
When rates drop there are multiple things that can come out of the woodwork as far as the types of transactions that are available to us to help first responders. More buyers may become eligible because lower rates create a more doable transaction.
Obviously the more you wait the more you’re taking a risk that rates move in the opposite direction. One of the bigger caveats, and this is something that just doesn’t get understood by the general public, is that almost all fixed-rate products are very much influenced by the 10-year treasury. Just because the Fed has lowered the benchmark rate does not mean that the market has not already moved in anticipation of it. That’s what happened in the last few weeks as the mortgage rates moved to the lower end before the news came out.
I’m not saying I’m a professional bond trader but I do look at the charts and I do see movement prior to news happening. That’s where working with a good mortgage loan officer who’s knowledgeable about the markets serves you well. Our loan officers definitely pay attention to the 10-year treasury. They have the chart up every day. They have an understanding on a day-to-day basis where the markets are moving.
We can’t predict the future, obviously, but we can catch some of the subtleties of the market and develop an understanding of when it might be a good time to lock in a rate. For instance, we can give you a rate quote today, but I know that Fridays are generally bad in the bond market and Mondays tend to be better for rates. Then you want to wait until Monday, right?
There are certain little nuances with knowledgeable loan officers, like those at Police Mortgage, that may be able to shave some fees or points off a loan and get you a better deal. That’s where the experience comes in. But none of this can really happen unless the Fed acts and they did. So that’s, again, a big positive for us.
Police Mortgage specializes in conventional mortgages, purchase money transactions, FHA loans, and VA loans. Led by founder and CEO John Aretos, Police Mortgage is known and respected for providing clients with exceptional service, customized terms, quick and easy closings, and low money down options. To learn more about Police Mortgage, call 312-499-8878.
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