Let’s take this example…
Let’s say we have a $200k, 30-year fully amortized, fixed-rate mortgage, which has a monthly principal and interest-only payment.
In the 1980s, the average rate interest rate was 12.7% and created a $2,166. Monthly mortgage payment.
Now in 2020, that same mortgage loan, with a 3.45% interest rate, the monthly payment is as low as $894!
That’s a difference of $1272 per month in savings! And over $15,000 every year for the life of the loan.
|YEAR||INTEREST RATE %||MONTHLY PAYMENT|
Now consider that the average value of real estate appreciation across the US is anywhere from 3 to 5 % annually.
This $200k home is creating $6 to $10k in equity. In just 5 years your $200k home could be worth $243,330, which is $43,330. more dollars than you had when you bought the home!
Granted, right now, many lenders are requiring a bit higher of a credit score to qualify, as long as you have some savings tucked away, a regular and historically verifiable income – now is such a great time to buy a home! As you have seen, it will save a good amount of money in the long run!!