GayRealEstateThis is a guest post from Jeff Hammerberg, the founder of GayRealEstate.com, the largest company in the nation representing the rights of queer home buyers and sellers. These are his words’¦

The Interest Rate Outlook Continues to Improve

Most of the business news emphasizes an expansive subprime debacle and the growing troubles of lenders and mortgage-backed security investors. Optimism is scarce in the headlines. Or at least it is scarcely reported within the mainstream media. But the fact is that major problems in the mortgage industry now overshadow the good news that conventional 30-year fixed rate mortgages are a bargain.

The Fed Funds rate was cut to a bare bones rate of 2 percent on April 30th. Recent rates on the tried-and-true 30-year fixed rate mortgage – which has been the bread and butter of the American housing market through all sorts of ups and downs – hover right around the attractive six percent level. Those who pay a little extra at closing can even get lower rates, and sometimes that is a smart strategy for those buyers who plan to stay in the home for many years.

Short-term owners are better off taking the going rate – which is still a bargain – because it will require less closing costs. That’s because if you intend to sell within 2-5 years you won’t have the loan long enough to capture savings over the long haul. Keep in mind while planning your exit strategies that if you stay in your home as a primary residence for at least two years, you will most likely qualify for a significant tax savings on any capital gains. With the housing market so oversold, capital gains are a very real possibility over the next 2-3 years, so homeowners who invest now and sell after the end of this decade may be rewarding with a double bonus of gains plus tax breaks.

If you are shopping for a home – at a time when home prices are historically affordable and builders of new homes are throwing in lots of valuable perks and upgrades – there is no time like now. This season, all over the USA, the building industry is – both literally and figuratively – throwing in everything including the kitchen sink in order to market and sell unusually backlogged inventories of new homes.

Or you may want to refinance, take out a home equity loan, or use a home equity line of credit (HELOC) to fund home improvements or upgrades. With the slowdown in the housing industry putting the squeeze on builders and contractors, their services are available for discounted prices. Many are hungry for work, so this summer will offer a great opportunity to add tangible equity and quality of life enhancements for a super reasonable price to a home, rental unit, or vacation property. Although this normally a hectic season to try to find qualified contractors – because most of the good ones stay booked months in advance – this year there are plenty of expert professionals waiting to jump on a job and get it done in a timely fashion.

Or you may have purchased a home within the past few years and gotten stuck with an increasingly expensive adjustable rate mortgage. In that case, refinancing into a predictably prudent conventional mortgage at current interest rates is a no-brainer. Although rates during the most recent real estate bull market spoiled many consumers with super-low single digit interest, many of those rates were just teasers or come-on’s to lure buyers into ARM loans that have now catapulted into double digit territory. But conventional 30-year rates like those offered now have not been around in years.

Don’t delay, however, because the Federal Reserve issued statements at its final April meeting insinuating that the unprecedented series of big rate cuts may now be ending. So those who capture a fixed rate now will enjoy built-in savings when the cycle again sends the cost of borrowing higher.

To offset the rising cost of other household expenses while maintaining a prudent rein on the mortgage, consider employing a biweekly payment strategy. Although many mortgage lenders and banks will manage a biweekly plan for you, they do so for fees that typically undercut your savings. A better strategy – as long as you are somewhat organized and have a moderate amount of financial discipline – is to just create and manage it all by yourself.

Here’s how it works. Let’s say, for instance, that your monthly payment is $1,600. Instead of paying once a month, just pay $800 every two weeks. By paying half of your monthly payment two weeks ahead of time, you will make the equivalent of a whole extra payment each year. Savings realized over the life of a 30-year loan could cut the payoff time by about three years. That not only saves you all those extra payments but it adds up to large savings of interest paid on your outstanding principal balance. Most mortgage companies will let you employ this clever but painless strategy, and it will not cost you any extra to launch your biweekly payment program.

Each of the mortgage and real estate brokers at www.GayRealEstate.com and www.GayMortgageLoans.com is especially committed to the GLBT community. To contact one of these experts just visit the Web sites or call toll free at 1-888-420-MOVE (6683).

More about Jeffery Hammerberg
Jeffery Hammerberg is Founder and President of Gay Real Estate, Inc. – the nation’s largest group of companies connecting gay & lesbian home buyers and sellers to gay, lesbian and gay friendly real estate agents. Since 1997, Hammerberg has created a virtual real estate marketplace for the LGBT community.