Mortgage Rates Are at a 30-Year Low.

As we've all heard, mortgage rates have steadily declined over the last several years and now stand at an all time low.

One of the attractions of buying a home is it gives you use of your investment while you are paying it off, and over time the equity in your home will increase. Buying a home is a very expensive decision to make and you need to take into consideration all of the known-factors, such as interest rates, income, and fixed expenses. In addition, you need to predict your home affordability into the future.

In the regular repayments for your home, it is quite common to have three individual payments rolled into one. These payments are for the mortgage, the property taxes, and the insurance. The mortgage is your standard principal plus interest (or interest only if you took out an interest only loan). The property taxes are usually levied by your local government and are based on the building value and the land value. The property taxes are a standard annual tax, however you do have the choice of paying this each time you make a home payment (a lot of people pay monthly). The third payment is your home insurance payment, which is also called hazard insurance. This insurance is usually mandatory, as it protects the lender in reclaiming their money if your home is destroyed or partially damaged.

Historically low interest rates and lower housing prices have made home-buying affordability the best it has been in many years. This is particularly good news for first time homebuyers because qualifying for a home purchase can be the most challenging from an affordability standpoint.

The chart below illustrates the difference in Principal and Interest payments on a $200,000 mortgage at various interest rate levels. Because every $100 in monthly savings translates into approximately $20,000 in additional mortgage affordability, more homes are in a buyer's price range.

 

Interest Rate	Principle and Interest Payment
4.50%	$1,013
5.00%	$1,073
5.50%	$1,135
6.00%	$1,199
6.50%	$1,264
7.00%	$1,330
7.50%	$1,398

If you been thinking about buying, this is the right market to jump in! The 'bottom' that everyone have been talking about can be a combination of many variabes, low prices, large inventory and low interest rates like we are experiencing now looks like the perfect combination. Call me for all your real estate needs in South MA and RI.

 

 

Noemi Cardoso
RE/MAX Patriot Properties
Serving Bristol County MA & RI
www.distinctivehomes-ne.com