Interest rates cannot be talked about too much right now. When have mortgage interest rates ever been at 4% or less? How about, never! Such low interest rates means saving hundreds of dollars on your monthly mortgage payment when purchasing or refinancing a home, compared to any other time in the history of mortgage loans. If you are considering purchasing a home or even refinancing, NOW IS THE TIME!!
Starting in 2008, rates started to come down from an already, historically low rate of 5.5% or so and then we started to gasp, and gasp and gasp as rates plunged lower and lower and lower.
In 2009 I was sitting in a closing with clients and was blown away to see their locked in mortgage rate of 4.75%. A year later, a different set of clients who were buying a home locked in at 4.2%. A month later they are now at 4.1%. A 15 year mortgage can be locked in at 3.5%!!
What does does this mean for your monthly payment?
Here is an example of your monthly payment on a median priced, Northern Utah home with a historical rate, vs. the current rate:
-Median Priced home (Wasatch Front): ~$200,000
-Loan Amount after 5% down: $190,000
-Historical Mortgage Interest Rate: ~8%
Monthly Payment: ~1,400
vs.
-Current Mortgage Rate 11/08/2011: ~4%
Monthly Payment: ~$900
Savings: $500!!!
History is an indicator of what to expect in any scenario. Using this historical indicator you can expect that mortgage rates will swing back up toward the 8% range, eventually. When that happens, you can expect a payment on a $190,000 mortgage to go up $500.00 per month. Of course, the savings are greater as the loan amount increases.
I'll put this opportunity into perspective: Let's say you borrowed the $190,000 to purchase the median priced home and locked in your 30 year loan interest rate at 4%. As an opportunist of the market, you make your minimum $900 mortgage payment and go the extra mile by pretending you are paying the historically average loan interest rate of 8%. This means you apply an extra $500.00 toward the principle balance of your loan. In this scenario, you would pay off the thirty year loan on your home home in fifteen years!! So, just by paying what a historically average borrower would have paid on a $190,000 mortgage, you will pay off your mortgage twice as fast as they would have!
Opportunity knocks. Take advantage of this incredible market. I'm ready to help as your agent.
2 comments:
Ok I absolutely love how well you explain everything. I am usually completely confused when it comes to interest rates and how they apply to my monthly payments, but this really makes sense to me. Thanks!!
WOW! People really need to take advantage!
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