Thinking about purchasing a home? Have everything in place but just dragging your feet for whatever the reason? Well interest rates are still at an all-time low and for how long, well nobody knows. One thing I do know is a lot of people that didn't take advantage of the housing prices when they were pretty close to rock bottom and they usually tell me they should have been proactive then (I have a client right now that says it everyday or so). Well now we are talking about interest rates and you don’t want to be that person that wishes they took advantage of the low rates once they go back up.
Let's say we have 2 scenarios, one with the interest rate being 3.625% and the other being 5%. I randomly selected a home that is listed at $360,000 in Woodbridge Virginia and the taxes are $4,235. The HOA is $89 monthly and let's just say 83.33 a month for homeowner's insurance(1000 yearly). For the sake of just throwing numbers in lets say 360 for MI (Mortgage Insurance). By the way we are assuming that you put 3.5% down payment and this is a 30 year fixed mortgage.
Scenario 1. (3.625%) Your payment would be $2469.57
Scenario 2. (5%) Your payment would be $2750.17
Now if you if you are in the market for a home that is around 360k don't let these numbers scare you. I'm no loan officer, I'm simply doing math for the sake of showing you the difference in payments based upon rates which is roughly 300 dollars. Would you act today if this meant possibly saving you 300 dollars or so if you didn't wait until 2013 or 2014? Now look at interest paid for 2012 for both Scenario 1 and 2, you are looking at a $4,000 dollar difference. Now look at total payments and you can see that if you stay in your home for the lifetime of the loan (doesn't happen very often) you would pay about 100k less in total payments at 3.625.
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