“Interest Rates”
Certainly, an important topic these days, but before I share my thoughts, please indulge me. Many years ago, I used to write a weekly article once a week in two papers in Eastern Connecticut and this article was titled, “Interest Rates”. Mortgage
interest rates at the time were 14-16% and one of my comments was, “if interest rates got down to 12%, I could refinance the whole world. That seems crazy, right?
Up until a few months ago mortgage interest rates were in the 2’s and 3’s range but have continued to increase over the last few months. I wish I could look into a crystal ball and tell you how long interest rates will continue to rise but can’t. Higher interest rates are here for a while, but should that stop you from buying a new home, adding an addition, or doing debt consolidation, hell NO.
Let’s look at some math, if you were going after a $300,000 mortgage at a 4.5% rate for 30 years, the payment would be $1,520, however at 3.5% the payment would have been $1,347, a difference of $173 per month. Would that difference stop you from buying, renovating, or doing debt consolidation?
I want to share a resent example, George had $30,000 in credit card debt and two car payment, the balance on the cars was $32,918 and the total of these payments was $1,900 monthly. His home was worth $321,000 and he had a mortgage balance $176,000 with a payment of $1,788 with taxes and insurance.
We did a new mortgage for George in the amount of $245,000 @4.375% for 20 years, the payment of principal and interest was $1,534, plus taxes and insurance of $633, the new total of his payment is $2,167. So, what is the benefit? A LOT!
His previous payments totaled $3,688, now $2,167 a savings of $1,521, that is like getting an $18,000 a year pay raise. What could you do with that $18,000 of tax-free money?
Let me know if you want to discuss, what could be possible.
“Who Else Do You Know That Needs My Help?”
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