Interest rates have dropped to historical lows and have remained low for several months. The average mortgage rate today is 4.37% which is the lowest it has been in half a century! No one knows how long interest rates will stay at these rock bottom rates. With predictions that the interest rate will rise in the near future, it is crucial for home buyers to realize that now is the best time for buy a new home! Despite the doom and gloom and the media reports in the housing market, there are many reasons for individuals sitting on the fence to move forward with buying their dream home. Even tiny increases in the mortgage rate translates into big differences in monthly payments and huge differences in the life of the loan payments!
Our current market is a once in a life time opportunity for home buyers!
The table below shows the impact the interest rate has on a home buyer purchasing a new home for $200,000 with a 10% downpayment of $20,000, and financing $180,000 on a fixed rate 30 year mortgage.
Mortgage rates are at rock bottom levels and won’t stay there forever!
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INTEREST RATE |
4.36% |
5.19% |
6% |
7% |
8% |
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Monthly Payment & Interest |
$897 |
$987 |
$1,080 |
$1,198 |
$1,321 |
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Difference in monthly payments |
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$90 |
$182 |
$300 |
$424 |
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Total interest paid over the life of the loan |
$142,964 |
$175,424 |
$208,509 |
$251,116 |
$295,480 |
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Interest saved over the life of the loan |
|
$32,460 |
$65,545 |
$108,152 |
$152,516 |
An increase from 4.36 to 5.19 caused an increase in the monthly mortgage payment of $90! Another interesting way to view this information is to consider how much more home an individual can purchase when interest rates are low. If the homeowner wanted to keep their monthly payment at $897 they have two options. They can increase the cash downpayment needed to close, or buy less home!
An increase from 4.36 to 5.19 will result in the home buyer bringing an additional $16,462 to closing!
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INTEREST RATE |
4.36% |
5.19% |
6% |
7% |
8% |
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Amount of Mortgage for $897 monthly payment |
$180,000 |
$163,538 |
149,612 |
134,825 |
122,246 |
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Downpayment required for $200,000 Home |
$20,000 |
$36,462 |
$50,388 |
$65,175 |
$77,754 |
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Purchased Price of Home with $20,000 Downpayment to keep payment $897 |
$200,000 |
$183,538 |
$169,612 |
$154,825 |
$142,246 |
If you are in the market to purchase your first home or considering selling your current home and buying a larger home, the market is highly favorable!
The affordability of home prices combined with historically low interest rates creates the perfect envirornment for home buyers!
This is good news for buyers!! We never know when the bottom of the market will be, or if interest rates will go lower. However, it is hard to imagine that mortgage rates would go lower than they are now.
If a home buyer has good credit, there is money available!
Forclosures are down for the first half of 2011. Home prices are showing recovery and begin to track upward with the housing recovery!
If you are considering buying a Murfreesboro TN home, or selling your current home in Murfreesboro, Brentwood, Franklin, Smyrna, or the surrounding area, please visit my website to a free market analysis of your home, or to use my FREE MLS IDX Home Search tool. I'd love to help you find your next dream home!
Take advantage of the extremely affordable housing prices by buying your new home now!
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