What would you say if I told you that if you pulled the trigger on your home search today I could save you over $250,000 over the duration of your loan? I’d guess that a large percentage of you would consider making that purchase and, at the very least, 100% would want to hear how this was even possible. So let’s cut to the chase, it all has to do with interest rates and, more specifically, taking advantage of the tremendous buying opportunity at hand.
For the sake of this argument we’ll use a $300,000 sales price as the base for our example home search. With a conventional loan of $240,000 (20% down) at the current rate (4% for this example – although I have seen people lock at mid-3’s recently) your monthly mortgage payment – with principle, interest, tax and insurance included – comes in just slightly under $1,600. The average interest rate over the past 30 years is 8.74% (source: Freddie Mac) and when applied to this same home search example yields a monthly payment of roughly $2,350. That is a whopping difference of $750/month or $9,000/year or, even more staggering, $270,000 over the 30-year term. Over a quarter of a million dollars saved just because you made the decision to do what most American’s are intimidated by at the moment and you purchased a house. Savvy move.
Rates haven’t been this low since JFK was President and it is probably the only healthy byproduct of the housing market collapse. True, banks are being stingy with who they lend to these days but if you work with the right agent (I know a guy) and they guide you properly then you will be one of the fortunate few to look back and say that you took advantage of what is truly a once in a lifetime opportunity.