Historically low interest rates - we keep hearing the words, but what do they mean? Is there really that big of a difference when the rate goes up a few points? And what are interest rates doing now?
Interest Rate Trends 1963 to 2010
Without seeing this chart, it's hard to picture how truly compelling interest rates have been over the past year.
The graph shows interest rate trends over the past 47 years - and it's obvious that rates are the lowest they're been for half a century!
National Average Contract Mortgage Rate 1963 to 2010
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Source: www.mortgage-x.com
Reprinted with permission
How Much More Home Can a Lower Rate Buy?
The exact same home simply costs less when interest rates are lower.
Here are sample principle and interest payments for the same $250,000 loan, at four different interest rates.
- The same $250,000 home will cost $175,289 more at a 7.75% interest rate than at a 4.75% interest rate, over a 30 year period.
- The same $250,000 home will cost $479 more per month, or $5748 more per year, at a 7.75% interest rate than at a 4.75% interest rate.
Does a lower interest rate mean I can buy a different home than I could a few years ago?
Yes! Here's an example.
At 4.75%, a $1300 monthly principle and interest payment can apply towards a home with a 20% higher price tag than a $1300 payment with a 6.75% interest rate.
The same $1800 monthly payment can apply towards a $250,000 or a $345,000 home, depending on the interest rate.
Interest rates are still incredibly low right now, but they are creeping back upwards from the historical lows.
Will we see rates this low again in our lifetime?
Copyright © 2010 Mortgage-X.com
Source: www.mortgage-x.com
Reprinted with permission
Based on past history, no. This may be a once in a lifetime opportunity to purchase a home at some of the lowest interest rates ever seen. Rates have been rising steadily since hitting their lowest point in November 2010, but are still at historical lows.
Check with your lender for today's rate, and learn how you can take advantage of this historical opportunity before rates continue to rise.
*Stanton Homes is not a lender, and is not affiliated with a lender. Calculations generated by MortgageRate.com online mortgage calculators, for principle and interest only. Check with your lender for rates and payments specific to your situation. Interest rates, payments, and other details will be verified with your lender.
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