Mortgage Update - Mortgage Rates Under 5%

Mortgage Update - Mortgage Rates Under 5%

By Liz Moeller, Centennial Mortgage
December 4, 2008
 
 
Interest rates under 5%?
 
 
 
Rates came down last week to as low as 4.99%*!
 
What does that mean for buyers?
It means that the cost of buying a house just went down! Or, it means that they can afford more of a house for the same monthly payment. I don’t usually do math problems in these Mortgage Updates, but this situation screams for an example using real numbers.
 
  • If a buyer was buying a house and getting a 30 year mortgage for $200,000 at 6.5%, the monthly payment would be $ 1,264.14. 
  • At a rate of 4.99%, that same $200,000 mortgage would now have a monthly payment of $1,072.42.  
  • That is $191.72 less per month for the same mortgage loan!
 
 
Another way of looking at it is that a buyer can afford more of a house for his or her money now that rates are lower. Let’s pretend that a buyer wants to keep his or her monthly payment around $1,500.
 
  • If rates were 6.5%, then the maximum mortgage amount would be $238,000 with a payment of $1,504.32 per month.
  • At a 4.99% rate, the buyer can get a mortgage for $ 280,000 for $1,501.39 a month.
  • This means that a buyer can get $42,000 more money for the same payment!
 
 
Rates like this make now a great time to buy!
 
 
* APR 5.258% based on a $200,000 loan amount and 1.5 points. Rate assumes credit score of 740+ and a  20% down payment. Rates as of 12/4/08. Rates and points can change at any time without prior notice.
 

Contact Information

Photo of Laurel Sweeney Real Estate
Laurel Sweeney
Berkshire Hathaway HomeServices Nutshell Realty
1209 State Route 213, PO Box 452
High Falls NY 12440
Office: 845-687-2200
Toll Free 877-468-5783
Fax: 845-687-4162

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