"All good things must come to an end..." or so the popular saying goes. And right now many people are wondering if this sentiment holds true for the historic low rates we've seen this year. Here's what last week's news suggests: First, it's important to understand that home loan rates are based on Mortgage Backed Securities, which is a type of Bond. Bonds typically help provide some built in "assistance" when the nation is suffering economic headwinds. For example, negative economic news serves to help Bond prices improve and rates decline, including home loan rates. This is helpful to have when the economy is struggling, as buyers of all products - including homes - need the extra incentive of low rates to be encouraged to buy.

But now, the sharply higher expectations for future economic growth has caused rates to climb - particularly including home loan rates, since the Fed announced its second round of "Quantitative Easing" or QE2 on November 3rd. With QE2, the Fed will purchase $600 Billion in Treasury Securities through mid-2011 to keep our economic recovery on track.

But is there any likelihood rates can rebound? Many experts expect that home loan rates will continue to move higher over time because:

• At its meeting last week, the Fed left the door open for further QE programs if our economic recovery requires which, like QE2, could hurt Bonds and home loan rates.
• Congress passed the $858 Billion Tax Cut Bill, and while this is a good economic stimulus, in the short run it adds to the ever-growing deficit - also bad for Bonds and home loan rates.
• Last week's Producer Price Index and Consumer Price Index Reports showed that the Fed appears to be on tract with their goal of stimulating a bit more inflation. Inflation erodes the value of the fixed return provided by a Bond, which causes home loan rates to rise.

It's important to understand that rates don't simply rise in a straight line. In fact, Bonds and home loan rates did have a late-week, and that trend of rates worsening with improving dips here and there like we saw last week may be what's in store for us in the weeks and months ahead. At the end of the day, the ongoing and potential addition of further stimulus from the Fed, combined with the stimulus from the tax cuts, will make it tough for Bonds and home loan rates to return to the levels seen earlier this year.

But the good news is that home loan rates are still extremely attractive right now. If you have been thinking about purchasing or refinancing a home, call or email me now to get started. Or forward this blog on to someone you know who may benefit from today's historically low rates.

From Mortgage Market Guide

You may think the following is a strange topic for the Real Estate Corner, but Student loans are a huge obstacle to people wanting to buy a home. Here are some tips.

Student Loans: How Much to Borrow?
by Farnoosh Torabi on 12/06/2010

My recent post on student loan bankruptcy continues to evoke comments from numerous borrowers fighting to make ends meet. Sophia Vackimes writes in that her $250,000 student loan is proving difficult to manage in a stagnant job market, even with her Ph.D. Another reader, Mike, responds that he has more than $80,000 in debt, while earning $30,000 a year.

Those loan figures are above average, but not uncommon in a time where college costs have practically tripled since the 1980s (inflation-adjusted). According to a new report by Pew Research, students who graduated with a bachelor's degree in 2008 borrowed roughly $15,000 (adjusted for inflation), which is a far cry from the numbers above, but still 50 percent more money than what graduating students borrowed in 1996.

What lender in its right mind gives a teenager (figuring you're 18 or 19 when you assume student loans) up to hundreds of thousands of dollars in student loans? And what borrower in his or her right mind accepts?

While we can't exactly control lenders' decisions, we can control what we, as borrowers take on. Just like you wouldn't (or shouldn't) accept a $500,000 mortgage if you're only making $50,000 a year (though banks granted those types of mortgages a few years ago), students should not take on more than they can feasibly carry. The average graduating salary offer for a bachelor's degree student is $47,673, according to NACE's Salary Survey.

For aspiring college students weighing their financing options, consider the following ballpark math for a manageable amount of student loan debt. Consider federal loans first, private loans never.

1. Consider your first year salary. Figure you'll make the average $47,673 the first year you graduate. That's close to $36,000 after taxes, assuming a 25% tax bracket.

2. Consider your budget. If your student loans were to make up 5% to 10% of your monthly budget, which is reasonable, considering you will have rent, car payments, some credit card debt, food and utilities, among other expenses, then you want a loan that requires a payment of no more than $360 a month - maximum. At the federal lending rate of 6.8% and a repayment term of 10 years, that's approximately $60,000 in student loans, which still even sounds a bit high to me. Yes, you will boost your earnings potential and can afford to pay more years down the line, but best to stay conservative here, since, again the banks certainly won't be. And not to be cynical, but who knows if you'll be able to get a job right away? It may take several months to land a job, as many current college graduates will tell you.

Bottom line: There are many ways to obtain an education in this country. Drowning in debt should not be one of them. Financial institutions won't likely tell you this. It's tough to accept the advice, since we all want to go to the best schools and get the best educations and that all comes at a price - far more than $60,000 - but like anything else in this world, if you can't afford it, figure out other ways to make it happen. In the financial world you often need to step in and be your own financial advocate. After all, no one cares more about your money than you.

my email address is george.margrave@migonline.com

What better gift could you give yourself than a new home?

What better gift could you give yourself than a new home? It may be one of the best times ever for that purchase. The rates are still really really great. You can probably find a home for 25-50% less than you could have 5 years ago.

The prices around the country seem to still be declining a little, but according to the local Realtors Association they have stabilized in middle Tennessee. In fact the median price is increasing.

Call me at 615-777-4663 and let's discuss your possibilities.