Generally speaking, everyone agrees that buying a home with a lower mortgage interest rate is a good idea, right? But let's look at the breakdown of how much a small interest rate change makes in your monthly payments. These low rates really allow you to buy more home right now - which is why NOW is the best time to buy a house.
Before we break down the payments, let's look back at interest rates over the past almost 50-years. Most mortgages are sold on the secondary market. Freddie Mac is one of the largest participants in the secondary market. Freddie Mac keeps track of their interest rates online. You can go back and review all of the rates since 1971 by visiting http://www.freddiemac.com/pmms/pmms30.html
In October 2020, interest rates were 2.83%
· Just 10 years ago, rates were in the 4.5% - 5% interest range
· And 20 years ago, rates were in the 7.5% - 8.5% interest range
The difference these interest rates make when buying a home could make the difference between you being able to afford a new home or not. Now, let's break down how those rates would change your purchasing power.
· TODAY if you purchased a home for $300,000 with a 2.83% interest rate – your house payment would be approximately $1,237.00
· However, if you purchased that same home for $300,000 with a 4.5% interest rate – your house payment would be approximately $1,520.00. That is almost $300 more per month and over $3,300 more per year.
· And if you bought that same home for $300,000 with a 7.5% interest rate – your house payment would be approximately $2,098.00. That’s over 850 more per month, and over $10,000 more per year.
*Note: These illustrations do not include any taxes or fees.
As you can see – NOW is a great time to buy a house. If you are thinking about making a move in the Dallas-Fort Worth area, give us a call at 469-759-3899. Our team of experts are here to personally help you with your move. If you are moving outside of North Texas, give us a call and we will introduce you to an amazing REALTOR wherever your move takes you.
About the author:
Melissa Hailey is the Broker-Owner of North Texas Top Team, REALTORS in the Dallas-Fort Worth Metroplex (and a huge fan of la Madeleine French Bakery restaurants). Our Team helps home buyers, sellers, landlords, and tenants move across North Texas and we connect clients to other great REALTORS across the country. She is a real estate instructor and coach who loves to see others succeed. She is a serial volunteer helping others in her community and in her industry. Connect with her at https://www.northtexastopteam.com/melissa-hailey/