Wednesday, September 9, 2020 / by Vanessa Saunders
By Vanessa Saunders, MBA, MIMC , Broker Owner, Global Property Systems Real Estate.
When people decide to buy a house, one of the first things they think about is how much house they can afford. But affordability isn’t just about how much down payment they can put down or what portion of their monthly income can go toward mortgage payments. The price of a house is about all that, but the most important factor that affects cost is the rate of interest on the mortgage.
Today’s mortgage rates are phenomenally low right now, which means buyers can afford much more house. Because it’s less expensive to borrow money, purchasing a home while mortgage rates are this low may save you significantly over the life of your home loan.
According to Mortgage News Daily, “Those shopping for a home can afford 10 percent more than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.”
A $315,000 mortgage taken out at today’s rate of 3.047% for a $30 year fixed-rate mortgage will cost borrowers $165,000 over the life of the loan. The same house mortgaged at 5% over 30 years will cost the borrower $293,755 by the time their last payment rolls around in September of 2050.
Clearly, taking advantage of today’s low mortgage rates will significantly affect how much the buyer will spend on his home in the long run. Low mortgage rates mean the cost of owning is at historically low levels and who gains all the benefits of strong house price appreciation? Buyers!
Interested in buying or selling a home the Mid-Hudson valley? CONTACT US.