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Interest Rates Currently Near a Record Low, but May Not Stay There for Long

By
Real Estate Agent with Beringer Realty

Interest Rates Currently Near a Record Low, but May Not Stay There for Long

It was reported in the online REALTOR® Magazine that mortgage interest rates dipped again this week, compared to last week, to nearly all-time lows. You can read the full article here.

However, the magazine has also published an article stating that these low rates may not be around for much longer. Currently, we are seeing signs of economic improvement, and if the improvement continues, the Federal Reserve may be tempted to finally increase rates.

I tend to think that the Federal Reserve will not alter the rates until much later in the year; however, I do expect interest rates to increase with the summer approaching, with or without help from the Federal Reserve. For now, keep in mind that the lower the interest rate, the greater your purchasing power for a home.

For instance, if you're purchasing a house with a 30-year loan for $150,000 at a 5% rate, your monthly principal and interest payment would be approximately $805. That payment would increase to about $851 at a 5.5% rate, meaning almost $600 a year more out of your pocket for only a 1/2% increase in the interest rate. With a lower interest rate you can afford to buy a more expensive home...or you can pocket the savings and retire early:-)

Please note that my comments are my opinion and are not meant to be construed as financial advice.

 

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Shannon Lewis is a Realtor® and broker at Beringer Realty located in Urbana, Illinois. She and her partner, Debbie Hensleigh, help home buyers and sellers in Urbana, Champaign, Savoy, and many other surrounding communities.

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To contact Shannon with a question, for real estate assistance, or just to say "hey!":

call 217-552-8059, or email Shannon@HomeplaceAdvisors.com

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