THE COST OF WAITING TO BUY A HOME
If you have been paying attention this January you will have noticed that interest rates hit their lowest levels since May of 2013. If you are thinking of buying a home this is something that you really need to pay attention to. Just a slight rise in interest rates will affect your monthly payment.
Here is an example:
Lets say you purchase a home for $650,000 with a 20% downpayment:
Loan amount $520,000 @ 3.875% rate
Principal and interest payment $2,445.23
Insurance $70.00
Property taxes $677.08
Total budgeted payment $3,192.31
Down payment: $130,000
About a year ago, this same scenario would have yielded an interest rate of 4.625%, making the payment $228 per month higher. These lower rates have allow home buyers to qualify for more purchase price!
Here is what Andrea Schenk of Santa Cruz Lending Group had to say about the interest rates:
The consensus is that the Fed won't act to raise rates until the economy is sufficiently strong. At this point, the central bank doesn't want to damage the recovery by acting hastily. If the economic data shows more strength, the Fed will act and increase rates.
The catalyst has been and continues to be Europe. European bond yields trended constantly lower in 2014, thus playing a prominent role in keeping US rates lower than they otherwise might be. Many feel that Europe will continue to slide until their central bank engages in US-style quantitative easing. Some see this happening in early 2015. It's impossible to know when Europe will turn a corner, and even then it's only the sort of thing we'll be able to observe in hindsight. In any event, we're looking for a turn in Europe, first and foremost, before worrying about the longer-term trend in bond markets being at serious risk of reversing.
Now is a great time to act to take advantage of the low rates and lower payments before the interest rates head back on the rise!
Contact Jessica at 831.419.9345 or yoursantacruzagent@gmail.com for more information.
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