There’s been a lot of talk recently about financing, Quantitative Easing (Q.E.; Q.E.1,Q.E.2), the Treasury, world markets and how this all affects interest rates. You’re probably asking yourself, “What do they mean and why should I care?”
In a nutshell, all of the above topics point to one of my favorite mantras, “You buy a home once, but you pay for it every month”. That’s why it’s important to think about how much it will really costs.
Let me educate you on just how important interest rates are. That way when you’re out this weekend chatting with friends or watching the news you’ll know exactly what interest rate changes mean and how they affect you.
Let’s do the math
If you had a loan amount for $500,000 at today’s rate of 4.0%, your monthly mortgage payment would be roughly $2,150 with a 10% down payment.
If rates rose just 1% you would lose 10% of your purchasing power.
That means your purchase price would be $450,000 for the same monthly payment or, with everything remaining the same, your payment would rise to $2,420 a month.
So, this is what all of the talk is surrounding. We have a fantastic opportunity to own if you are still renting. Rates will rise, as will everything else, (been shopping for groceries lately??) so now is the time to take advantage and secure yourself a low rate.
Get your ducks in a row, and call your real estate professional to discuss your needs.
