One of the most common Real Estate topics which is reported about online is the rise and fall of mortgage interest rates.
Although many websites talk about low mortgage interest rates, and why it’s a great time to buy a home when interest rates are low, they don’t always talk about how rising mortgage interest rates can hurt you, and why you should buy a home before they climb even higher.
To break it down into simple economics, when mortgages interest rates are low like they are right now (currently 4.00%, or lower, for a 30-year fixed mortgage loan) it’s more affordable to borrow money and you will have a lower monthly payment.
For example: Let’s say you wanted to borrow $100,000. Paying off this money at an interest rate of 3.92% over 30 years will cost you about $473 per month.
Now if mortgage interest rates were to increase this year to 4.92% that same $100,000 would cost you $636.11 per month.
That’s a difference of $163.11 per month!
Not much money to sneeze at for some people but when you factor in the high cost of living in Southern California that’s money which you could use for savings, retirement or fuel costs every month.
Buying Now Will Help
Thanks to an improving jobs market, and better economic data across the United States, buying a home now is a smart move considering the fact that mortgage interest rates are only predicted to increase over the next year.
Many economic analysts predict that mortgage interest rates will increase by 1% or more this year so if you’re intent on saving the most money that you can over the next 30 years then buying a home in 2015 is one of the best moves you can make.
For more information about mortgage interest rates, or to view the latest homes for sale across Orange County, contact Fred Sed & Associates today by calling us at (949) 272-0125.