Lower Home Mortgage Rates on the Horizon

Dear Sue,

My home is on seven splittable acres. I am at a point in my life where I am ready to sell it. I plan on interviewing several agents. The biggest question I have is whether or not I should split the property before I sell it and sell the parcels separately or let the buyer split it.

I would appreciate your advice.

Selling Sam

Dear Sam

It depends.

You need more information. I would suggest that you talk to a land planner or civil engineer in order to make a decision.

A split may or may not be feasible. The costs to split your property may be so high that it would be impossible to recoup your money. A land planner will take the surprises out of the cost of the splitting process. He/she will consider access, the cost of utilities, government fees and engineering costs.

A land split is not as easy as 1,2,3. For example, if one is required to buy property from adjoining property owners in order to gain access, the cost may be too high. If the property is on a main road the cost to access may be minimal. Keep in mind, however that the county has various requirements. For instance, if the road has too much curve it may not meet the line of sight requirements. The county will not allow access onto a parcel that doesn’t have several hundred feet of visibility of oncoming traffic. Your land planner or engineer will be aware of this and other requirements.

Once the cost of splitting is determined the next logical step would be to back it out of the fair market value of the property being split. If it adds significantly to your bottom line then it is worth it. If not, sell as a whole piece.

Dear Sue,

The Feds dropped their benchmark interest rate down to essentially zero. Previous reductions of the bench- mark rate have not lowered mortgage rates in the past. Why is everyone in the real estate industry so excited about it? What makes this move so different?

Skeptical Rick

Dear Rick,

The Fed’s key rate is not directly correlated to mortgage rates, however Tuesday’s announcement included promises to pump massive amounts of money into several segments of the economy in order to free up lending which most experts believe is the key to getting the economy back on track. The Feds promised to aggressively buy mortgage backed securities and continue to make loans available to Fannie Mae and Freddie Mac.

The news caused the stock market to jump nearly 5%.

Mortgage rate reductions are sure to follow. I expect interest rates to drop to the mid to low 4% range. We saw 4.78 the first part of this week. The lower rates should cause a refi boom as well as a jump in home purchases. The message seems to be that if this latest strategy doesn’t jump-start the economy the feds will do something else until it does. I think that the Feds recent move is a matter of good home $$’s and sense