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Plain Talk About What Mortgage Rates Mean to You the Buyer

By
Real Estate Agent with Tailored Real Estate Services

So many times, I find people that are renting have no idea that they could in reality be paying LESS PER MONTH TO BUY a house THAN TO RENT a house or apartment.

Current interest rates are at a historial low.  What does this mean to you really? 

An interest rate of 5% (and as of today the rates were below that for a 30 year fixed rate mortgage) would mean that you are paying $5.37 per $1000.00 borrowed.  Simply put, that means that if you borrowed $60,000.00 your payment would be $322.20 per month! 

Let me back up a minute and explain 30 year fixed rate mortgage.  This means that the loan is for a period of 30 years and the interest rate will not change during the life of the loan.

Wait a minute you say.  If everyone could buy a house and pay $322.20 a month for it why would anyone rent???

The truth of the matter is that property taxes, purchase mortgage insurance and homeowners insurance must be factored in as well.  AH HA...the catch!!!

Let's say the property taxes are approximately $700 every 6 months on that $60,000 house you are eyeing.  What that equates to is $116.66 per month for property taxes.  So let's add that to the loan payment of $322.20 and now the payment is $438.86.

Now there is the homeowners insurance that will be required by your lender and protects you from fire, theft, wind damage, etc. (Note different insurance policies cover more or less, so shop around) should run approximately between $600 and $800 per year.  For my example I am going to use the high end figure. (Always good to plan for more than less when budgeting) So that would be $66.66 per month added to our figure of loan payment (322.20) and property taxes (116.66) for a total of $505.52. 

Depending on the size of your downpayment, (most loans require a minimum of 3.5% these days) you may be required to have purchase mortgage insurance or PMI as the lenders call it.  That figure is calculated by the lender and runs between approximately $40.00 to $90.00 per month.  Again I am going to error on the high side.  So adding that to loan payment, property taxes, homeowners insurance your total payment would be approximately $596 per month to buy a house of your very own!!!  How much are you paying for rent????

Purchasing a house for $60,000 would require a downpayment of $2100.00.  I bet you got that much back in your tax refund this year.  What did you do with that money? 

Did you know that there are possible tax benefits available to you for buying a home? Do you realize that if you are paying $600.00 per month rent that you are spending $7200.00 per year, helping to pay off someone else's mortgage? After 5 years of paying that rent you have paid $36,000.00!!

Don't sit around and wonder if you can buy a home.  Call me and let's see if we can't put you in a home of your own.  What do you have to lose...a few minutes of your time?  Might be worth the call...

Posted by

Connie Johns, Realtor

Transaction Realty 

Connie Johns is a Realtor in Toledo, Ohio. Serving Buyers and Sellers real estate needs in the greater Toledo area and surrounding suburbs of Maumee, Perrysburg, Holland, Sylvania, Rossford, Northwood and Oregon. Homes for sale in Toledo, Ohio, specializing in first time homebuyers, investors, short sales and foreclosures.

Visit www.ConnieJohns.com for the latest listings, real estate information, and helpful tips.

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