1. Again, favorable to the homebuyer. In a few words, the trend appears to be flat for the coming few weeks. And that's not to say it will not spike up during a few days during those weeks. Over the past 22 years, we are looking at one of the best periods we have seen in interest rates. Today's rates are the best they have been in 21 months.
   
   
2. Interest rates have declined more than 1.5 percent since July, 2000. This has been taking place even before Mr. Greenspan of our Federal Reserve lowered the interest rate a half point on January 3, 2001. From what I have learned from my lender, Jim Siket, Compass Bank, the bond market does a fairly reasonable job of anticipating these changes even before the Federal Reserve makes it decisions. The bond market is a strong influence on mortgage rates.



3. 2. My lenders tell me they believe interest rates are beginning to level out, but there is the chance that rates may decline slightly in the coming weeks, but may level off after that. After all, a 1.5% decrease in mortgage rates has occurred over the past 8 months, and we do not know how much further we can expect these rates to decline.



4. Much also depends on our economy and the impact of foreign economies on our production in the United States.



5. Let me caveat all of this by saying that this is the general opinion of many investors who analyze the market everyday. There are always surprises. The Federal Reserve lowered the rate two weeks ago and no one knew it until the Fed made its announcement. So, I am saying that there is now and always will be some unpredictability in the mortgage market. But the rates are great today and this may be the time to purchase that new home.

1. Generally, and this has been applicable for the past several years in the Scottsdale housing market, now is the time to buy. I say that because a potential homeowner is losing about 2% per year in his or her ability to enter into the housing market.
   
   
2. Remember, when renting, all of the rent is not tax deductible. In the case of a home mortgage all of the interest for a loan up to $1 million is tax deductible. That can make a huge difference over a 3 to 5 year span of time

Using $200,000 as a reference mortgage amount here is the difference:

1. P+I for a $200,000 mortgage at 8.500% on a 30 Yr mortgage is $1,538.
   
   
2. P+I for a $200,000 mortgage at 6.875% on a 30 Yr mortgage is $1,314.



3. Note that the July payment of $1,538 would be the payment on a $234,000 mortgage today. That, in essence is the difference between the mortgage on the purchase of a $250,000 home in July, 2000 versus a $292,500 home in January, 2001, both with 20% down payments.

Using the same approach for a Jumbo Loan amount for $650,000:

1. P+I for a $650,000 mortgage at 8.750% on a 30 Yr mortgage is $5,114.
   
   
2. P+I for a $650,000 mortgage at 7.375% on a 30 Yr mortgage is $4,489
   
   
3. Note that the July payment of $5,114 would be the payment on a $740,500 mortgage today. That is the difference between the mortgage on the purchase price of a $812,500 home in July, 2000 versus a $925,625 home in January, 2001, both with 20% down payments.

1. A great big "YES." Today, a couple, filing a joint tax return, can exclude as much as $500,000 of gain on the sale of their primary residence. For singles, the limit is $250,000. And, this can be accomplished for every sale as long as the homeowners live in the home as their primary residence for at least two of the past five years.
   
   
2. Whatever the gain, it makes for a wonderful down payment on the next home or can be a significant contribution to one's nest egg.