Mortgage Rates – Is it Time for You to Buy?
According to a recent article from CNBC, rates just dropped to 3.69%, the lowest they’ve been since October of this past year. That’s a fantastic rate. If you’re thinking about buying, it might be a good idea to act fast, rather than waiting for the summer to approach, even though there could be more home options available.
When I bought my house about 2.5 years ago, the rate was hovering right around 4%. Not terrible in the grand scheme of things, but it’s now gone down nearly .3%. Quite a drop! According to valuepenguin.com, as of 2015, 60% of mortgagors (that word never looks like it’s spelled right), have rates between 3.00% and 4.9%.
So what are we comparing this to? Well, if we look at some historical data, the highest rates in the last ~50 years was a whopping 18.63% in 1981! (valuepenguin.com). Let’s do some even scarier math. Let’s say you wanted to buy a $200,000 house. We’re going to compare buying it now with a 3.69% interest rate and if you bought that house in 1981 with the 18.63% interest rate. (This is just a rough estimate, not including taxes, insurance, etc). Ready?
2020. $200,000 loan, rate of 3.69% would come to payments of $919 a month. 919 x 12 months x 30 years = $330,840. Nothing too crazy here.
1981. $200,000 loan, rate of 18.63% would come to payments of $3117 a month (!!). $3117 x 12 x 30 = $1,122,120. Holy bananas. It’s a little impressive people were actually able to buy homes in 1981. (I think my parents managed to luck out a little when they bought their home in the ’70s).
If you’re interested in playing around with these numbers, google ‘mortgage calculator’ and google has a built-in one you can use. It’s amazing how the rates have changed over the years and it’s important to see how much an interest rate can affect your total payments throughout the years.