## Tuesday, June 9, 2009

### Mortgage Rates Begin to Climb

After staying fairly consistent around 4.75% through late April and most of May, mortgage rates began a climb last week. Today they are a full percentage point higher than they were this time last month. This is not entirely unexpected, since noone believed we could maintain historic low interest rates forever.

So how does this affect the average home buyer?

Let's assume you are borrowing \$100,000, at a fixed rate, for 30 years.

If your rate were 4.75%, your monthly payment (principal & interest only) would be \$521.65.

If your rate were 5.75%, your monthly payment (principal & interest only) would be \$583.57.

With an interest rate difference of just 1%, you would pay an additional \$61.92 per month.I don't know about you, but I could use an extra 60 bucks a month. It might buy me a tank or two of gas at today's prices.

But let's look at the bigger picture: How much interest you will pay over the course of the 30 years.

At 4.75%, you will pay \$87,794 in interest on your loan after 30 years. At 5.75%, you will pay \$110,085 in interest. That's a difference of \$22,291!

I'm writing this with the hope of visually demonstrating to you how critical it is that you buy a home at the lowest interest rate possible. I know many people are holding out on buying a home, waiting for the best time to get the best deal. If interest rates continue to climb, you may have already missed the peak opportunity.

If you wait, and interest rates climb another percentage point to 6.75%, you stand to pay an additional \$23,411 more in interest than if you bought today at 5.75%.

In addition to still being able to get a good interest rate, the first time home buyer tax credit is only available for 5 more months. Combine the \$8000 from the tax credit with what you would save in interest, and you are looking at over \$31,000 in savings.Do you have \$31,000 to waste?

I'm not even going to start in on how low the home prices are today. I think you can see already that now is truly a great time to buy. If you would like more information on the benefits of buying a home today, please visit my website and contact me today for a personalize home buying plan that fits your individual needs.