In this Blog:
Rates, keep going up
Is it time to invest?

Rates, keep going up:

Another week and another increase in interest rates. Let's look at some of the numbers.

The biggest movement in rates this week was caused by today's unemployment numbers. Although there were not what was expected, they were all right.

Unemployment went from 9.6% to 9.0%, with the US economy creating about about 36,000 non farm jobs. That in conjuction with Wednesday ADP number of +187,000 show that the US economy is adding jobs, but we still showed over 300,000 1st time application being processed.

Based on these numbers, and the fact that things are looking a little more positive in Egypt, has send interest rates up for the day.

Another number, that people really need to be watching is inflation, although the Federal Reserve believes it is under control, both Commodities and Energy inflation has been creaping up, quite rapidly. Which is causing some concern that the Fed may make a rate movement sooner than later, i.e. towards the end of the year.

All of this has had Bond traders selling, and with the Stock Market now over 12,000, we have seen the 10 Year Bond trade in the 3.64% range, which by all accounts should put interest rates into the 5.25% range.

You can see by the 10 year Bond chart that it has been steadily going up, up, up. Which is making interest rates go up, up, up.
We definately saw the bottom of the rates in November. It is anticipated that by spring, we could be in the Mid 5's for most of the conventional rates.


It is time to invest:

This week I have been speaking with quite a bit of investors who are purchasing homes, all of them can't buy them fast enough. So here is some insite from one of them:

-Interest rates are not going to get any better than they are right now.
-Although home prices will continue to decline for the next year or so, they will eventually start to go up. So get a good price on a home at a low rate.
-Monthly rents have been going up over the last 6 months, as a result of...
-According to 1 local data provider, vacancy rate is at 4%, which is the lowest it has been in years.
-More people are being forclosed upon at a faster pace, they have to live somewhere.

Here is 1 example of a investor I am doing 2 homes for:

Home #1 is in Boise, purchase price is $83000, (needs new carpet), he is putting 20% down, and the seller (bank) is paying all his closing costs. So his loan amount is $66,400 @ a 5.50% rate. His PI is $377.01,
Taxes are $122,
insurance is $45,
so his total payment is $544.
He has a potential rentor already at $755/month.

Home #2 is in Nampa, purchase price is $55,000, put 20% down, and seller is paying all closing costs. Loan amount is $44,000 @ a 5.50% rate.
His PI is $249.33
Taxes are $83
Insurance is $38
Total payment is $370.83
Renting it for $600/month