A reality check perhaps? This chart shows the trend of the 30 year fixed interest rate for the last 37 years. Let’s say it’s the 1980′s and you are looking for a home. You give me a call about getting yourself pre-approved for a new home loan and I share with you how the rates are currently doing.
18% for a 30 year fixed rate? With 20% as a down payment on a $200,000 sales price, that’s a mortgage payment of $2411.34. That’s just the principal and interest payment.
Now, the current 30 year fixed rate is about 6.0%. With a 20% down payment on a $200,000 sales price, that’s a mortgage payment of $959.28! That’s a difference of 1452.08 every month!
Here an even better way to look at it. Let’s assume the first mortgage payment of $2411.34 was affordable for you. That same payment with today’s interest rates will buy you a home in the price range of $500,000! Yes, that’s half a million dollar home!
Now, perhaps a half a million dollar home is too much, (it would be too much for me at the moment) but you can see how today’s mortgage rates are still at a historical low.
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