How Long have they been keeping track? It doesn’t really matter…

August 13, 2010

Interest Rates are the lowest in "recorded history".

How long have they been keeping track*? It doesn’t really matter! Does it?

The reality of very, very low interest rates is the important thing. Consider this……..low interest rates can do one of three key things for you when you are buying a home. You can choose what option is best for you:

    1. Lower Monthly payments 
    2. More purchasing power
    3. Paid off sooner


Here is an example:
Say you were qualified for a $200,000 mortgage before the real estate meltdown of the past several years. The basic details of your proposed mortgage would have been something like this…..$200,000 mortgage     6.25% interest rate   $1231.44 P&I per month for 30 years

Today it would be:$200,000 mortgage     4.375%** interest rate   $998.58 P&I per month for 30 years
(saving $ 232.86 per month. Yearly savings $ 2794.32.
7 years (average length of time a mortgage is held) = savings $19,560.24

OR
Feel comfortable sticking with the $1232 payment? Now you can have a $246,800 mortgage and have a payment of $1232.24. How much more house can you buy with the additional almost $50,000?

OR
Get the $200,000 mortgage and pay it off in less time (talk about saving money!!!) now you get an even lower rate. 

20 year mortgage rate would be 4.25%** for a payment of $ 1238.47. 

A 15 year mortgage would have an interest rate of 3.875%** and the payment would be $1466.88. 

Wow, talk about saving money! Just think of 10 or 15 years with no mortgage payment. Imagine what you could do with that extra money!!!!!

Please remember we’re just looking at the bottom line of your pocket book–the principal and interest payment you make every month.

Yes, there are many more costs and things to consider when buying a home besides the base interest rate and the principal and interest payment….the APR, real estate taxes, insurance, the costs of maintaining a home, your situation, less interest deduction on your tax return…of course…..it goes on and on. (we’re trying to keep it simple).What ever your price point….$100,000, $200,000, $600,000 or anywhere in between….the same concepts apply.

The mortgage interest rates are the lowest in 50 years! Need help figuring out your "numbers"? Call Paula or Nancy today (see contact info below in the red).

*For those who really need to know-Freddie Mac started tracking rates in 1971 (1 year before Nancy started in real estate) WOW-that was a long time ago.

**Interest rates used in the scenarios above were available on 8-10-10.

REALTORS Nancy and Paula Schmelzer have a combined total of 45+ years in the Real Estate business. Both work at the First Weber Group Office in Sun Prairie, Wisconsin. Nancy is an Associate Vice President and Broker Associate. Paula is the Assistant Branch Manager. This successful Mother and Daughter Team have tremendous knowledge of the real estate business; it’s processes, laws and regulations. Both have served as President of the Realtors Association of South Central Wisconsin. Nancy in 1986  and Paula in 2008.  They can be reached at either 608-834-1184 or 608-834-4724, their website, on Facebook, or by email [email protected].

Written by Paula & Nancy Schmelzer and originally posted here at their  blog http://blog.RealEstateTickertape.com  

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