The Coronavirus is causing widespread concerns about the future of our booming economy. No one knows when it will be contained and what the impact on the housing market will be.
Uncertainty, however, creates opportunities for buyers. With last week’s cut in interest rates home loans are cheaper than ever and your affordability went through the roof.
“Amid uncertainty, the house-buying power
of U.S. consumers can benefit significantly.”
Mark Fleming, Chief Economist, First American Financial Corp.
30-Year Mortgage Rates Hit 50-Year Low
If you are a Millennial buyer, you probably can’t imagine how your parents paid more than 10% for a mortgage.
The chart below shows how interest rates changed over time. They peaked in 1981 at 18.63%, dropped below 10% in the 1990’s, and held steadily below 5% since 2010.
How Interest Rates Impact Monthly Payments
Let’s take a 30-year mortgage on a $545,000 home purchase like the one on Rushwood Drive below. Say you pay $45,000 down and take out a $500,000 loan.
At the current average rate of 3.29% your PI (principal & interest) payment would be $2,187 per month.
A year ago, you had to pay $2,504 per month at the interest rate of 4.4%.
That’s a savings of $317 per month or $3,804 per year.
How Your Affordability Has Increased
At last year’s interest rates of 4.4% you could only afford a $482,000 house for the $2,187 monthly payment. That’s $63,000 less.
Today you can afford a 13% more expensive home.
Here’s another way to look at it. For an extra $100 a month (that’s less than 1 Starbucks Latte a day) you can afford $20,000 more when you purchase a house.
That’s a lot of extra buying power.
Even with home values rising by almost 10% over the past few years, low interest rates have made home ownership more affordable than ever.
Don’t Delay your Home Purchase! Call or text me TODAY at (614) 975-9650.
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.