What would move you to purchase a home? Would it be the low price or the low interest rate? We have both right now, but let’s see what effect this has on a loan payment. According to Freddie Mac, for the week of May 10, 2012 30 year, interest rates hit a 40 year low for 30 year, fixed rate loans, at 3.83%.
Your monthly cost is actually what controls how much house you can afford, so it would stand to reason that is your purchasing power. We can compare rates by using the average interest rate of 8.9% for the last 40 years, to this week’s rate at 3.83%. I’ll even show the savings:
|
Loan Value |
*Payment at the average rate since 1972 (8.9%) |
*Payment at today’s rate (4.0%) |
Money saved PER MONTH |
|
150,000 |
1196.16 |
701.50 |
494.66 |
|
200,000 |
1594.88 |
935.33 |
659.55 |
|
**215,000 |
1714.49 |
1005.48 |
709.01 |
|
250,000 |
1993.59 |
1169.17 |
824.42 |
|
300,000 |
2392.31 |
1403.00 |
989.31 |
* The payment shown here includes principle and interest only. Insurance, Private Mortgage Insurance, Taxes and other items will add to the payment.
**The median sale price of a home in Virginia Beach for the first 4 months of 2012. If you’d like me to show you the savings for you city, area or even neighborhood, give me a call.
Note: This communication is provided to you for informational purposes only and should not be relied upon by you. Rose & Womble is not a mortgage lender. You should contact Advance Mortgage Company, or any other lender of choice directly to learn more about mortgage products and your eligibility for such products.
There are so many different outlooks on this. First, the interest rate and resulting loan payment you get now won’t go up. If you are renting, your rent will. Second, what could you do with that much extra money in your monthly budget? Vacations, car payments, travel, or grow your savings account. Either way, when interest rates hit a 40 year low, it’s time to buy a home!
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