Rising Interest Rates Means Homes are More Expensive

With interest rates at historic lows, home buyers have been taking advantage of “cheap” money for the past couple years.  But interest rates are set to rise with the federal reserve’s decrease in bond purchasing.  The availability of cheap money will be gone soon so if you’re on the fence about purchasing, take a hard look at the following numbers:

Example: A buyer gets a 30-year fixed-rate mortgage at a 5 percent interest rate on a $300,000 loan.

Monthly payment: $1,610.46
Total payment: $579,569.69
Total interest: $279,769.69

Example: A buyer gets a 30-year fixed-rate mortgage at 6 percent interest rate on a $300,000 loan.

Monthly payment = $1,798.65
Total payment = $647,515.44
Total interest = $347,515.44

Just a 1% rise in interest rate increases the monthly payment $188 and the total interest almost $68,000.  To avoid this increase, give me a call today!

Source: http://realtormag.realtor.org/daily-news/2013/10/10/why-it-might-be-cheaper-buy-now?om_rid=AACLKS&om_mid=_BSVxHPB81u25$z&om_ntype=RMODaily

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