Mortgage market: Time to buy?

LOS ANGELES Home loan applications are soaring nationwide, and with good reason.

Home mortgage rates have slipped below five percent for the first time in decades.

The mortgage market is flashing the "time to buy" sign to house hunters, and sales are already up.

Luis Araoz refinanced his home recently and couldn't be happier with the new interest rate.

"It went down from 5.75, which we had and which was a pretty good deal already fixed, to a 4.5 fixed, 30-years," says Araoz.

Araoz's mortgage broker, Gavin Fenske of Great Financial, says rates have dropped below five percent, a magic number for consumers.

In fact, some rates are as low as 4.625 percent, but the average is more like 4.9 percent.

"There are definitely more applications coming in the door, I'd say, in the last 30 days," says Fenske.

"It's just been tremendous, as far as calls and things, and the activity has definitely picked up," he adds.

Here are some ways to save.

If your loan balance is about $250,000, and your rate is now six percent, the payment is just around $1,500. But at 4.9 percent, the payment is only $1,326, which amounts to a savings of $172 each month.

The savings are even more with a bigger loan, like $600,000. At six percent, the payment is just under $3,600. But at 4.9 percent, the payment is under $3,200, which amounts to a savings of $413 each month.

These lower rates have inspired home sales.

"It seems to be first time home buyers, and that's kind of been a market that's been coming back, and I've noticed that even in the last 60 days," says Fenske.

According to the California Association of Realtors, Los Angeles and Ventura counties' sales in August were up 6.7 percent.

In Orange County, there was a 5.9 percent increase. Unfortunately, sales were virtually flat in Riverside and San Bernardino counties.

Interest rates won't stay low forever. In fact, there is talk that the government will stop buying mortgage-backed securities in March 2010. If they do, then we'll see interest rates go back up and possibly dramatically.

So, now is the time to refinance or possibly buy a home.

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