INTEREST RATE FLUCTUATIONS AND HOME PURCHASE

By
Real Estate Agent with WEST COAST TEAM REALTY

How do interest rate affect a home purchase transaction?  This past week with interest market volatility has provided both excitement and anxiousness for many potential buyers.

On Monday Sept. 15, rates for a 30 year mortgage were as low as 5.25% with 1.5% points on avg. On a 400,000 mortgage it equates to a $2,208 monthly payment, principal and interest.

However, as of this writing on Friday the 19th, rates are 5.75% with similar points.  That payment on the very same loan amount just went up to $2,334!!!.  Thats $1,500+ per year, $45,000+ over the life of the loan.

For certain, most always there exixts these fluctuations, which we have little control over. One ideal solution is to simply ask yourself as a buyer, "Can I afford these payments" , or "am i willing to pay this amount monthly for this particular home".  If the answer is YES, then look for a lender to lock in the rate right away and see that they will offer you a free float down feature, that is even if the rate is locked you can float down to a lower rate during the lock period.

This year we have seen on several occassions,  extreme fluctuations in rates in a very short periods. The potentially low rates many have predicted seem to last but a few days at best. 

A buyer should choose a lender that has  flexibility that will give the buyer the confidence to buy without surprises.

Mario Savan

949 830-3001  x205 

Comments (1)

Neal Barnes
Starstate Realty - Killeen, TX
Broker, REALTOR, ABR, CRS, GRI, SRES, SRS.

Hi Mario  -  Welcome to ActiveRain.  I look forward to networking with you and reading your future post.  Have a nice day!!!

Nov 06, 2008 02:41 PM