7/06/2010

The Current Market is Offering Incredibly Low Interest Rates!

This afternoon I did an interesting calculation because I was playing around with a feature on my website. First of all, did you know interest rates are well below 5% on a 30-year fixed, even as low as 4.25%? Second of all, do you expect that to last forever? It's lower than any rate since the 1960's and before, and certainly lower than any rate in the last 15 years since I've been helping buyers and sellers.


I did this calculation for my 2 bedroom/2 bath condo in Bixby Knolls which is currently listed at $182,500. The default down payment was 20%, the default interest rate was 6%, so using those numbers for calculate principal and interest (only), the monthly payment came out to be $875.34. (That's the price of a one-bedroom rental in some areas.) But knowing that interest rates are much lower right now, I changed the assumptions to 4.25% and assuming an FHA buyer, I used 3.5% down, and based on a loan amount of $176,112.50, the monthly P&I payment came to approx $866.37!! (Please do not use this scenario for your final loan calculations as disclosed by a lender, this is intended for general information only.)

In other words, with lower interest rates right now a buyer could be saving the difference between $6387 and $36,500 to get the practically same payment for less money compared to the higher interest rates of just 1 and 2 years ago.

Back to my earlier point: it won't last forever, so why not take advantage of the market now if your only reason is that you're "waiting"?

I am here to help you with finding a new property, so I hope you'll let me do that, because you will be helping yourself!


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