Mortgage Interest Rates – What Difference Does It Make

A 1% decrease in Mortgage Interest Rates can provide significant savings to your monthly and annual mortgage payments.

Let’s use an example:

Purchase Price: $300,000

Loan Terms:

  • 30 Year Conventional
  • 20% Down
  • Fixed Rate:
    • 5% – Monthly Principal & Interest = $1,288
    • 4% – Monthly Principal & Interest = $1,145
          •   Est Savings = $143 per month, $1,700 per year

 

Just a 1% increase added about $143 to this buyers monthly P&I and a little over $1,700 to the annual P&I. So there is a difference; a big difference. This example is calculated with a 20% down payment. If we adjust that to a lower down payment, say 5%, there is larger savings to be had per month as the buyer is leveraging more on the loan.

 

Purchase Price: $300,000

Loan Terms:

  • 30 Year Conventional
  • 5% Down
  • Fixed Rate:
    • 5% – Monthly Principal & Interest = $1,530
    • 4% – Monthly Principal & Interest = $1,360

   Est Savings = $170 per month , $2,040 per year

 

Engage or re-engage with a lender to understand how these low interest rates can make home ownership more achievable.

Posted on March 19, 2020 at 8:46 pm
Justine Marx | Category: Buyers, WHO LOVES STATS, Windsor Real Estate | Tagged , ,

How Will the Real Estate Market Respond to Rising Interest Rates?

Posted on September 20, 2018 at 3:22 pm
Justine Marx | Category: Buyers & Sellers, Economics | Tagged , , , , ,

The Cost of Waiting

However, homes that are priced right and in great condition are selling, and in many cases, selling quickly.

As buyers feel the market cool a bit, it may cause them to want to wait. They sometimes feel like it’s a better choice to ‘wait and see what happens.’

The reality is, there is a real cost to waiting given two specific facts.

1. Interest rates will continue to rise
2. Prices will continue to rise

Interest rates are a little more than 0.5% higher than a year ago and experts predict them to be another 0.5% higher by this time next year.

Prices have been appreciating at roughly 10% per year for the last four years. Based on the numbers, we see that appreciation could be 5% per year for the next two years.

So, let’s look at a house priced at $450,000 today. If prices go up “only” 5% for the next 12 months, that home will cost $22,500 more in a year.

And, if rates go up another half percent, the monthly payment will be $206 higher. That’s an 11% increase!

In an environment of rising prices and rising rates, there is a real cost to “wait and see.”

Posted on September 11, 2018 at 5:49 pm
Justine Marx | Category: Buyers, Colorado Real Estate Market, Fort Collins Real Estate, Housing Trends | Tagged , , , , , ,