This is basically a spin-off from a blog I wrote a few days ago but another valid point was brought up in a meeting I attended this morning and I felt it was that important to re-emphasize the point. This morning, a lender stood up and said he locked in a rate on a 30-year loan at 3.875%. UNDER 4%!!??? Do you have any idea how amazing this is!? Let me put it this way.. I have a client who was approved on a 30-year loan at 4.4%. Because of the condo he is purchasing, he has to obtain special financing which increased his interest rate to 4.9%. Not a big deal, right!? WRONG!! Just a 0.5% increase in the interest rate means a $43 increase in each monthly payment, which equates to a $516 increase yearly and a $15,480 increase over the life of the loan. Can you imagine what the increase will be when interest rates begin the climb and we're back to 5, 6, 7+++% interest rates!? In the same meeting, a lady stood up and said she purchased a home in the 80's and her interest rate was locked at 21%! 21%!??? Can you imagine what THAT monthly, yearly, loan-term increase would be!? I would rather not do the math on those numbers..
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