If you were in the market to buy a home in 2018, you most likely witnessed a competitive housing market and increasing interest rates. While the 2019 housing market is still competitive, interest rates have declined. For home buyers, this is good news!
Mortgage rates are determined by the interest on 10-year Treasury notes, which have decreased substantially since late last year. This means your mortgage dollars will stretch further. Let’s use an example to explain how this is positive news for your wallet.
Example with $250K purchase price
If you were to purchase a $250,000 home in 2018 with a 5.25% interest rate and a 5% down payment, your monthly mortgage payment (principal and interest only) would be $1,311.48. With today’s rate, in the same situation, your mortgage payment (principal and interest only) would drop to $1,099.90.
That’s a savings of $211.58 per month, or $2,538.96 per year. Imagine what you could do with that much money back in your wallet!
You may qualify for a higher loan
Lower interest rates also allow more flexibility in your home purchase price budget, which in today’s competitive market, may be a necessity. For every one percent decrease in interest rate, your home buying power increases by $31,000 at the same monthly mortgage payment; that’s a lot more house!
If we’ve learned anything in 2019, it’s that our home buying clients are benefiting from the reduction in interest rates. They’re able to reduce their monthly mortgage payments and/or increase their home purchase budget. Interested in learning what you could qualify for with today’s interest rates? Contact one of our seasoned loan officers for a free consultation! 833.354.5626