Mortgages and Economic Impact
How can the Current Mortgage Rates Benefit me in Buying a New Home
As I talk with clients, the “Big 3” that effect your monthly mortgage payment are Interest rate, Taxes, and Insurance. Besides maintaining a good credit rating, potentially buying points for a better interest rate or putting a down a significant down payment, there is not much that you can do to lower your interest rate.
During times like these, with an impact that effects the economy and mortgage interest rates, it is the perfect time to purchase a new home. Interest rates are the one “Big 3” item that you have little or no control over, that is why it is important to take advantage of the current low interest rates.
Right now, you have the opportunity to obtain a mortgage with a significantly lower interest rate, in the range of the middle to low 3’s percentage range. Locking in a low interest rate for the life of your mortgage you will save $100’s monthly and $10,000’s over the life of your term of your loan.
Example of a $200,000 mortgage 3.25% interest rate:
Price of Home: $200,000
Interest Rate: 3.25%
Monthly Payment: $920.36 approx., plus insurance and taxes
Interest paid for Life of Mortgage: $109,381.25 approx.
Example of a $200,000 mortgage 4.25% interest rate:
Price of Home: $200,000
Interest Rate: 4.25%
Monthly Payment: $1,029.86 approx., plus insurance and taxes
Interest paid for Life of Mortgage: $148,799.84 approx.
As you can see, a reduction of 1% in your interest rate can significantly reduce the overall life of the loan amount. In addition to saving you on your monthly mortgage payment.
In our example of a $200,000 home with a 1% decrease in interest rate:
· You SAVE approximately $109.50 a month in your monthly payment.
· Over the life of your mortgage on a 30-year mortgage, you would AVOID
approximately $39,418.49 in interest.
SAVE MONEY on a new home with improved rates that keep your monthly costs down, choosing to buy now vs. waiting until later when the interest’s rates are rising back up.