For weeks, interest rates for 30 year fixed rate mortgages have been hovering around 4%. Ask Melody if this is reason to celebrate, after entering the industry in the 80’s when rates were at (gulp!) 11%, and she may just slap you silly. Well, not really. But maybe. For those who may not know the significance of adding a percentage or two to your interest rate, consider this..
At the peak of the market in 2007, when folks were buying for top dollar, flipping, selling, buying, and sleeping real estate, rates for a 30 year fixed mortgage were as low as 6.27 in March, and as high as 6.96 in August. The numbers for 2011 are 4.34 and 5.26 respectively. So, what happens to your payment on a purchase of $200,000, $300,000, $400,000 with this change in rates, you ask? Quite a bit-
You buy a home for $200,000, put 10% down and finance $180,000. At the 2007 low of 6.27% (Source: HSHAssociates.com), your payment would be about $1,318.95. With this years low rate of 4.34% (Source: HSHAssociates.com. Some sources show even closer to 4.0%, but we will use this to be conservative), the payment would be $1,103.33. That is a difference of $215.62 a month ($2,587.44 a year!). Using the same considerations on a purchase of $400,000, with 10% down, and financing $360,000, at the low of 2007 the payments would have been about $2,637.93. With today’s rates, financing $360,000 would make the payment about $2,206.67. That is a difference of $431.26 a month ($5, 175.12 a year!). That is huge when you consider that difference is not money going to your principle!
We are interested in helping you not only find the home of your dreams, but also to make sure that you make a sound investment. We pride ourselves on developing long lasting relationships with our clients, and feel that it shows in the level of loyalty our clients show us. If you think you’re ready to take the plunge, or just want some more information on the market, give us a jingle! 🙂
-Melody & Natalie