BUYER ALERT: These Affordable Mortgage Rates Are Not Going To Last Subscribe to RSS feed

Are you sitting on the fence about a possible move?  Would you like a larger/smaller/different home but have been sitting on the sidelines until things settle out?

 BUYER ALERT: These Affordable Mortgage Rates Are Not Going To LastIf you answered yes to either question, perhaps you need to jump down off the fence and pick out a home that really meets your needs.

Home values may be almost inconsequential if you plan to purchase using borrowed money.  I predict interest rates are going to dramatically change the affordability of housing

 

Lets take a look at a typical $300,000 home in my neighborhood.

1. Assume you are putting down $60,000 as a down payment (20% of purchase price)

2. Assume you need an 80 % loan to value.  Your loan amount will be $240,000

3. Assume you are getting a 39 year amortized loan (360 monthly payments).

4. I am going to assume you could get a 4.6 % interest rate today on this loan.

5. Lets assume you will have to pay a 10 % interest rate if you wait and purchase a home in 2012

6. You can use the MORTGAGE CALCULATORon the englishteam.com website if you want to change my assumptions!!!

Monthly Payment if you buy now: $1,468

Monthly Payment if you wait to buy in 2012: $2,344

MONTHLY DIFFERENCE: $876

DIFFERENCE OVER LIFE OF LOAN: $315,360 

If mortgage interest rates increase to double digits, as many economists presently predict, then that $300,000 house will cost a borrower an additional $315,360 if you wait and buy in 2012.

BUYER ALERT: Buy that dream home now while you can still afford it!!!!