There is a lot of news around Interest Rates and Real Estate right now. Why is this important to follow? If you are a Home Buyer or considering a purchase in the next few years it is very important to watch the Rates being offered from Lenders. We have never seen rates as low as they are currently but we are also watching them climb back up as quick as they fell. On average a Buyer who is looking to purchase a $200,000 home can expect to pay around $2,000 per year per 1% interest. So if the Interest rate goes up by 1% that buyer is simply putting around 1% more per year in the Banks pocket instead of their own. The other problem with this is that Buyers who can only afford to spend $200,000 on a home can expect that they can only afford $180,000 if the rate goes up 1% before they “Lock” the interest rate they need. That means that the payment on $180,000 is now the same as the payment on $200,000 when the rate was 1% lower. Now I am NOT a lender and these numbers are just examples and should not be held as Fact but they are far from Fiction and they are pretty darn close. The differences could be anything from Tax’s and Insurance, HOA fees The term of the loan ect. So please make sure and get the exact breakdown from your lender. But dont think that 1% is a small number.
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