Interest rates, UP or DOWN?

So it would appear that our economy is headed back to the positive. Over the last six months the DOW has gained over 2,200 points. Investors are slowly gaining enough confidence in the market to start buying stocks again. But, what about the housing market?

The last few years has given the market in real estate a major beating. Home values have been pounded with little signs of recovery. Just recently the housing market seems to have became somewhat stable. Instead of falling home sales it appears the market has became flat.

So what trend will mortgage interest rates follow? The last week has given way to another slight decrease in the 30 year fixed rates, which brings me to the real reason for writing this article.

A few months ago I wrote an article about buying some land to build a future home. We got a great deal on a foreclosed acre of land in a nice neighborhood. The land appraised for just over $80,000 and we paid $52,000 so a deal that was hard to pass up. When we purchased the land we couldn’t find the developer in the phone book or Internet so we assumed the rules for building would be relaxed. The only rule that worried us was having to build a home within 8 months after purchasing the land.

We were prepared to build the house in the next couple of years, but 8 months would be a little too soon for us financially. Well about a week ago I met the developer while cleaning up the lot. Needless to say he wants us to start construction as soon as possible in order to keep the contract valid. He was very nice about the situation but wants us to start within a year.

With all this said, I’m hoping interest rates continue to stay well below 6% over the next year. A difference of 1% in interest rates will cost us an extra couple of hundred dollars per month. We’re listing our house next month by owner with hopes of a quick sale. We want to rent for 6 to 8 months while saving some money for a good down payment. Hopefully interest rates will stay on our side.