Interest Rates are at historic lows hovering around 4.25%. If you are still on the fence, it may be time to seriously consider the advantages of locking in this low of a rate for 30 years. Additionally, the increase in your buying power is significant. If the rates increase just .5-1%, you will actually end up paying more per month than if you had bought at a slightly higher priced home with a lower rate. This may also mean that you can afford more home than you would have been able to if the rates had been higher. This is in the favor of sellers at the same time because they now have an increased buyer pool.
Here is an example:
| NOW | SCENARIO 1 | SCENARIO 2 | ||||
| Homes Decline 5% | Homes Increase 5% | |||||
| 1% Rate Increase | 1% Rate Increase | |||||
| HOME PRICE | $500,000.00 | $475,000.00 | $525,000.00 | |||
| DOWN PAYMENT | 3.50% | |||||
| LOAN AMOUNT | $482,500.00 | $458,375.00 | $506,625.00 | |||
| INTEREST RATE | 4.500% | 5.500% | 5.500% | |||
| MONTHLY PAYMENT | $2,444.76 | $2,602.60 | $2,876.56 | |||
| Savings – Monthly | $157.85 | $431.80 | ||||
| Savings – Life of Loan | $56,826.00 | $155,448.00 | ||||
Kfoley Homes by Kristen Foley, REALTOR® 